Correlation Between Toro and Astral Foods

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

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

Diversification Opportunities for Toro and Astral Foods

-0.28

Correlation Coefficient

Toro  Astral Foods

Very good diversification

The 3 months correlation between Toro and Astral is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Toro Co 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 Toro 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 Toro Co 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 Toro i.e., Toro and Astral Foods go up and down completely randomly.

Pair Corralation between Toro and Astral Foods

Considering the 90-day investment horizon Toro Co is expected to under-perform the Astral Foods. In addition to that, Toro is 3.51 times more volatile than Astral Foods Limited. It trades about -0.08 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 19, 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

Toro Co  vs.  Astral Foods Limited

Toro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toro Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Toro and Astral Foods

The main advantage of trading using opposite Toro and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toro 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 Toro Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.