Correlation Between Astral Foods and Lifeway Foods

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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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Astral Foods Limited  vs.  Lifeway Foods

 Performance 
       Timeline  
Astral Foods Limited 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Astral Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Lifeway Foods 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Lifeway Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lifeway Foods reported solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Astral Foods Limited and Lifeway Foods 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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