Correlation Between SBM OFFSHORE and Astral Foods
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE and Astral 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 SBM OFFSHORE and Astral Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Astral Foods Limited, you can compare the effects of market volatilities on SBM OFFSHORE and Astral 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 SBM OFFSHORE with a short position of Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Astral Foods.
Diversification Opportunities for SBM OFFSHORE and Astral Foods
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SBM and Astral is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE and Astral Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods Limited and SBM OFFSHORE 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 SBM OFFSHORE are associated (or correlated) with Astral Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astral Foods Limited has no effect on the direction of SBM OFFSHORE i.e., SBM OFFSHORE and Astral Foods go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Astral Foods
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 3.52 times less return on investment than Astral Foods. But when comparing it to its historical volatility, SBM OFFSHORE is 1.01 times less risky than Astral Foods. It trades about 0.07 of its potential returns per unit of risk. Astral Foods Limited is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 865.00 in Astral Foods Limited on August 29, 2024 and sell it today you would earn a total of 85.00 from holding Astral Foods Limited or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Astral Foods Limited
Performance |
| Timeline |
| SBM OFFSHORE |
| Astral Foods Limited |
SBM OFFSHORE and Astral Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Astral Foods
The main advantage of trading using opposite SBM OFFSHORE and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE position performs unexpectedly, Astral 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 Astral Foods will offset losses from the drop in Astral Foods' long position.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Microsoft | SBM OFFSHORE vs. Microsoft |
| Astral Foods vs. Superior Plus Corp | Astral Foods vs. NMI Holdings | Astral Foods vs. Origin Agritech | Astral Foods vs. SIVERS SEMICONDUCTORS AB |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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