Correlation Between Tsogo Sun and Astral Foods

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

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

Diversification Opportunities for Tsogo Sun and Astral Foods

-0.57

Correlation Coefficient

Tsogo Sun  Astral Foods

Excellent diversification

The 3 months correlation between Tsogo and Astral is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tsogo Sun and Astral Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods and Tsogo Sun 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 Tsogo Sun 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 has no effect on the direction of Tsogo Sun i.e., Tsogo Sun and Astral Foods go up and down completely randomly.

Pair Corralation between Tsogo Sun and Astral Foods

Assuming the 90 days trading horizon Tsogo Sun is expected to under-perform the Astral Foods. In addition to that, Tsogo Sun is 2.01 times more volatile than Astral Foods. It trades about -0.28 of its total potential returns per unit of risk. Astral Foods is currently generating about 0.0 per unit of volatility. If you would invest  1,899,600  in Astral Foods on September 27, 2024 and sell it today you would lose (3,600) from holding Astral Foods or give up 0.19% of portfolio value over 90 days.

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

Tsogo Sun  vs.  Astral Foods

Tsogo Sun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsogo Sun has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Astral Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astral Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astral Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tsogo Sun and Astral Foods

The main advantage of trading using opposite Tsogo Sun and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsogo Sun 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 Tsogo Sun and Astral Foods 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.