Correlation Between Northstar Clean and Astral Foods

Can any of the company-specific risk be diversified away by investing in both Northstar Clean and Astral Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Northstar Clean and Astral Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Northstar Clean Technologies and Astral Foods Limited, you can compare the effects of market volatilities on Northstar Clean and Astral Foods and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Northstar Clean with a short position of Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Astral Foods.

Diversification Opportunities for Northstar Clean and Astral Foods

0.16

Correlation Coefficient

Northstar Clean  Astral Foods

Average diversification

The 3 months correlation between Northstar and Astral is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Astral Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods Limited and Northstar Clean is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Northstar Clean Technologies are associated (or correlated) with Astral Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astral Foods Limited has no effect on the direction of Northstar Clean i.e., Northstar Clean and Astral Foods go up and down completely randomly.

Pair Corralation between Northstar Clean and Astral Foods

Assuming the 90 days horizon Northstar Clean Technologies is expected to generate 7.7 times more return on investment than Astral Foods. However, Northstar Clean is 7.7 times more volatile than Astral Foods Limited. It trades about 0.24 of its potential returns per unit of risk. Astral Foods Limited is currently generating about 0.13 per unit of risk. If you would invest  16.00  in Northstar Clean Technologies on October 23, 2024 and sell it today you would earn a total of  11.00  from holding Northstar Clean Technologies or generate 68.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Northstar Clean Technologies  vs.  Astral Foods Limited

Northstar Clean Tech

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northstar Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Astral Foods Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Astral Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Northstar Clean and Astral Foods

The main advantage of trading using opposite Northstar Clean and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean position performs unexpectedly, Astral Foods can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Astral Foods will offset losses from the drop in Astral Foods' long position.

The idea behind Northstar Clean Technologies and Astral Foods Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.