Correlation Between Astral Foods and ABSA Bank
Can any of the company-specific risk be diversified away by investing in both Astral Foods and ABSA Bank 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 ABSA Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astral Foods and ABSA Bank Limited, you can compare the effects of market volatilities on Astral Foods and ABSA Bank 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 ABSA Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and ABSA Bank.
Diversification Opportunities for Astral Foods and ABSA Bank
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astral and ABSA is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods and ABSA Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA Bank Limited 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 are associated (or correlated) with ABSA Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA Bank Limited has no effect on the direction of Astral Foods i.e., Astral Foods and ABSA Bank go up and down completely randomly.
Pair Corralation between Astral Foods and ABSA Bank
Assuming the 90 days trading horizon Astral Foods is expected to generate 3.33 times more return on investment than ABSA Bank. However, Astral Foods is 3.33 times more volatile than ABSA Bank Limited. It trades about 0.25 of its potential returns per unit of risk. ABSA Bank Limited is currently generating about 0.22 per unit of risk. If you would invest 1,724,900 in Astral Foods on August 28, 2024 and sell it today you would earn a total of 146,000 from holding Astral Foods or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astral Foods vs. ABSA Bank Limited
Performance |
| Timeline |
| Astral Foods |
| ABSA Bank Limited |
Astral Foods and ABSA Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astral Foods and ABSA Bank
The main advantage of trading using opposite Astral Foods and ABSA Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, ABSA Bank 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 ABSA Bank will offset losses from the drop in ABSA Bank's long position.| Astral Foods vs. Quantum Foods Holdings | Astral Foods vs. RCL Foods | Astral Foods vs. Trellidor Holdings | Astral Foods vs. Prosus NV |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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