Correlation Between Astral Foods and Nedbank
Can any of the company-specific risk be diversified away by investing in both Astral Foods and Nedbank 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 Nedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astral Foods and Nedbank Group, you can compare the effects of market volatilities on Astral Foods and Nedbank 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 Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and Nedbank.
Diversification Opportunities for Astral Foods and Nedbank
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Astral and Nedbank is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group 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 Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Astral Foods i.e., Astral Foods and Nedbank go up and down completely randomly.
Pair Corralation between Astral Foods and Nedbank
Assuming the 90 days trading horizon Astral Foods is expected to under-perform the Nedbank. But the stock apears to be less risky and, when comparing its historical volatility, Astral Foods is 1.07 times less risky than Nedbank. The stock trades about -0.11 of its potential returns per unit of risk. The Nedbank Group is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,813,900 in Nedbank Group on November 3, 2024 and sell it today you would lose (70,600) from holding Nedbank Group or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astral Foods vs. Nedbank Group
Performance |
| Timeline |
| Astral Foods |
| Nedbank Group |
Astral Foods and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astral Foods and Nedbank
The main advantage of trading using opposite Astral Foods and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, Nedbank 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 Nedbank will offset losses from the drop in Nedbank's long position.| Astral Foods vs. Prosus NV | Astral Foods vs. Compagnie Financire Richemont | Astral Foods vs. British American Tobacco | Astral Foods vs. Glencore PLC |
| Nedbank vs. Mantengu Mining | Nedbank vs. African Media Entertainment | Nedbank vs. CA Sales Holdings | Nedbank vs. Kumba Iron Ore |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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