Correlation Between BAKER and Astral Foods

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

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

Diversification Opportunities for BAKER and Astral Foods

-0.31

Correlation Coefficient

BAKER  Astral Foods

Very good diversification

The 3 months correlation between BAKER and Astral is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BAKER HUGHES A 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 BAKER 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 BAKER HUGHES A 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 BAKER i.e., BAKER and Astral Foods go up and down completely randomly.

Pair Corralation between BAKER and Astral Foods

Assuming the 90 days trading horizon BAKER HUGHES A is expected to under-perform the Astral Foods. But the bond apears to be less risky and, when comparing its historical volatility, BAKER HUGHES A is 1.84 times less risky than Astral Foods. The bond trades about -0.21 of its potential returns per unit of risk. The Astral Foods Limited is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  710.00  in Astral Foods Limited on October 26, 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	94.74%
Values	Daily Returns

BAKER HUGHES A  vs.  Astral Foods Limited

BAKER HUGHES A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAKER HUGHES A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAKER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 BAKER and Astral Foods

The main advantage of trading using opposite BAKER and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAKER 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 BAKER HUGHES A 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.