Correlation Between ASTRA INTERNATIONAL and Peabody Energy
Can any of the company-specific risk be diversified away by investing in both ASTRA INTERNATIONAL and Peabody Energy 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 ASTRA INTERNATIONAL and Peabody Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASTRA INTERNATIONAL and Peabody Energy, you can compare the effects of market volatilities on ASTRA INTERNATIONAL and Peabody Energy 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 ASTRA INTERNATIONAL with a short position of Peabody Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASTRA INTERNATIONAL and Peabody Energy.
Diversification Opportunities for ASTRA INTERNATIONAL and Peabody Energy
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASTRA and Peabody is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ASTRA INTERNATIONAL and Peabody Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peabody Energy and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL are associated (or correlated) with Peabody Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peabody Energy has no effect on the direction of ASTRA INTERNATIONAL i.e., ASTRA INTERNATIONAL and Peabody Energy go up and down completely randomly.
Pair Corralation between ASTRA INTERNATIONAL and Peabody Energy
Assuming the 90 days trading horizon ASTRA INTERNATIONAL is expected to generate 1.52 times more return on investment than Peabody Energy. However, ASTRA INTERNATIONAL is 1.52 times more volatile than Peabody Energy. It trades about -0.1 of its potential returns per unit of risk. Peabody Energy is currently generating about -0.38 per unit of risk. If you would invest 29.00 in ASTRA INTERNATIONAL on November 29, 2024 and sell it today you would lose (3.00) from holding ASTRA INTERNATIONAL or give up 10.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASTRA INTERNATIONAL vs. Peabody Energy
Performance |
| Timeline |
| ASTRA INTERNATIONAL |
| Peabody Energy |
ASTRA INTERNATIONAL and Peabody Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASTRA INTERNATIONAL and Peabody Energy
The main advantage of trading using opposite ASTRA INTERNATIONAL and Peabody Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASTRA INTERNATIONAL position performs unexpectedly, Peabody Energy 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 Peabody Energy will offset losses from the drop in Peabody Energy's long position.| ASTRA INTERNATIONAL vs. Fast Retailing Co | ASTRA INTERNATIONAL vs. Alfa Financial Software | ASTRA INTERNATIONAL vs. COSTCO WHOLESALE CDR | ASTRA INTERNATIONAL vs. National Retail Properties |
| Peabody Energy vs. Games Workshop Group | Peabody Energy vs. BOVIS HOMES GROUP | Peabody Energy vs. Boyd Gaming | Peabody Energy vs. Canadian Utilities Limited |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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