Correlation Between Astral Foods and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both Astral Foods and Coffee Holding 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 Astral Foods and Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astral Foods Limited and Coffee Holding Co, you can compare the effects of market volatilities on Astral Foods and Coffee Holding 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 Astral Foods with a short position of Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and Coffee Holding.
Diversification Opportunities for Astral Foods and Coffee Holding
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Astral and Coffee is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding and Astral Foods 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 Astral Foods Limited are associated (or correlated) with Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of Astral Foods i.e., Astral Foods and Coffee Holding go up and down completely randomly.
Pair Corralation between Astral Foods and Coffee Holding
Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 4.49 times more return on investment than Coffee Holding. However, Astral Foods is 4.49 times more volatile than Coffee Holding Co. It trades about 0.15 of its potential returns per unit of risk. Coffee Holding Co is currently generating about 0.02 per unit of risk. If you would invest 395.00 in Astral Foods Limited on October 30, 2024 and sell it today you would earn a total of 440.00 from holding Astral Foods Limited or generate 111.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astral Foods Limited vs. Coffee Holding Co
Performance |
| Timeline |
| Astral Foods Limited |
| Coffee Holding |
Astral Foods and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astral Foods and Coffee Holding
The main advantage of trading using opposite Astral Foods and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding's long position.| Astral Foods vs. Granite Construction | Astral Foods vs. PLANT VEDA FOODS | Astral Foods vs. TreeHouse Foods | Astral Foods vs. MOLSON RS BEVERAGE |
| Coffee Holding vs. Games Workshop Group | Coffee Holding vs. Cars Inc | Coffee Holding vs. GigaMedia | Coffee Holding vs. Scientific Games |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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