Correlation Between Simon Property and Astral Foods

Can any of the company-specific risk be diversified away by investing in both Simon Property 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 Simon Property and Astral Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Simon Property Group and Astral Foods Limited, you can compare the effects of market volatilities on Simon Property 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 Simon Property with a short position of Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Astral Foods.

Diversification Opportunities for Simon Property and Astral Foods

-0.15

Correlation Coefficient

Simon Property  Astral Foods

Good diversification

The 3 months correlation between Simon and Astral is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group 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 Simon Property 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 Simon Property Group 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 Simon Property i.e., Simon Property and Astral Foods go up and down completely randomly.

Pair Corralation between Simon Property and Astral Foods

Assuming the 90 days trading horizon Simon Property Group is expected to under-perform the Astral Foods. In addition to that, Simon Property is 2.09 times more volatile than Astral Foods Limited. It trades about -0.02 of its total potential returns per unit of risk. Astral Foods Limited is currently generating about 0.13 per unit of volatility. If you would invest  710.00  in Astral Foods Limited on December 20, 2024 and sell it today you would earn a total of  29.00  from holding Astral Foods Limited or generate 4.08% return on investment over 90 days.

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

Simon Property Group  vs.  Astral Foods Limited

Simon Property Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simon Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Simon Property is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Astral Foods Limited

Risk-Adjusted Performance

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 Simon Property and Astral Foods

The main advantage of trading using opposite Simon Property and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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 Simon Property Group 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.