Correlation Between New Residential and Astral Foods
Can any of the company-specific risk be diversified away by investing in both New Residential 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 New Residential and Astral Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and Astral Foods Limited, you can compare the effects of market volatilities on New Residential 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 New Residential with a short position of Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Astral Foods.
Diversification Opportunities for New Residential and Astral Foods
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between New and Astral is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment 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 New Residential 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 New Residential Investment 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 New Residential i.e., New Residential and Astral Foods go up and down completely randomly.
Pair Corralation between New Residential and Astral Foods
Assuming the 90 days trading horizon New Residential is expected to generate 1.01 times less return on investment than Astral Foods. But when comparing it to its historical volatility, New Residential Investment is 1.95 times less risky than Astral Foods. It trades about 0.48 of its potential returns per unit of risk. Astral Foods Limited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 860.00 in Astral Foods Limited on September 3, 2024 and sell it today you would earn a total of 90.00 from holding Astral Foods Limited or generate 10.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Astral Foods Limited
Performance |
| Timeline |
| New Residential Inve |
| Astral Foods Limited |
New Residential and Astral Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Astral Foods
The main advantage of trading using opposite New Residential and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential 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.| New Residential vs. Richardson Electronics | New Residential vs. Clean Energy Fuels | New Residential vs. Renesas Electronics | New Residential vs. METHODE ELECTRONICS |
| Astral Foods vs. Archer Daniels Midland | Astral Foods vs. Tyson Foods | Astral Foods vs. Wilmar International Limited | Astral Foods vs. SalMar ASA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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