Correlation Between Astral Foods and AECI

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Can any of the company-specific risk be diversified away by investing in both Astral Foods and AECI 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 AECI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astral Foods and AECI, you can compare the effects of market volatilities on Astral Foods and AECI 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 AECI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and AECI.

Diversification Opportunities for Astral Foods and AECI

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Astral and AECI is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods and AECI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI 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 AECI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI has no effect on the direction of Astral Foods i.e., Astral Foods and AECI go up and down completely randomly.

Pair Corralation between Astral Foods and AECI

Assuming the 90 days trading horizon Astral Foods is expected to generate 1.39 times more return on investment than AECI. However, Astral Foods is 1.39 times more volatile than AECI. It trades about 0.06 of its potential returns per unit of risk. AECI is currently generating about -0.23 per unit of risk. If you would invest  1,816,800  in Astral Foods on September 8, 2024 and sell it today you would earn a total of  58,400  from holding Astral Foods or generate 3.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Astral Foods  vs.  AECI

 Performance 
       Timeline  
Astral Foods 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Astral Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.
AECI 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AECI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Astral Foods and AECI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Astral Foods and AECI

The main advantage of trading using opposite Astral Foods and AECI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, AECI 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 AECI will offset losses from the drop in AECI's long position.
The idea behind Astral Foods and AECI 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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