Correlation Between Astral Foods and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Astral Foods and Lifeway 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 Astral Foods and Lifeway Foods 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 Lifeway Foods, you can compare the effects of market volatilities on Astral Foods and Lifeway 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 Astral Foods with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and Lifeway Foods.
Diversification Opportunities for Astral Foods and Lifeway Foods
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Astral and Lifeway is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Astral Foods i.e., Astral Foods and Lifeway Foods go up and down completely randomly.
Pair Corralation between Astral Foods and Lifeway Foods
Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 0.38 times more return on investment than Lifeway Foods. However, Astral Foods Limited is 2.64 times less risky than Lifeway Foods. It trades about 0.12 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.03 per unit of risk. If you would invest 885.00 in Astral Foods Limited on September 13, 2024 and sell it today you would earn a total of 65.00 from holding Astral Foods Limited or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astral Foods Limited vs. Lifeway Foods
Performance |
| Timeline |
| Astral Foods Limited |
| Lifeway Foods |
Astral Foods and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astral Foods and Lifeway Foods
The main advantage of trading using opposite Astral Foods and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, Lifeway 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Astral Foods vs. Tyson Foods | Astral Foods vs. Mowi ASA | Astral Foods vs. SalMar ASA | Astral Foods vs. Superior Plus Corp |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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