Correlation Between Life Healthcare and Astral Foods
Can any of the company-specific risk be diversified away by investing in both Life Healthcare 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 Life Healthcare and Astral Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Healthcare and Astral Foods, you can compare the effects of market volatilities on Life Healthcare 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 Life Healthcare with a short position of Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Healthcare and Astral Foods.
Diversification Opportunities for Life Healthcare and Astral Foods
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Life and Astral is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare and Astral Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods and Life Healthcare 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 Life Healthcare 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 has no effect on the direction of Life Healthcare i.e., Life Healthcare and Astral Foods go up and down completely randomly.
Pair Corralation between Life Healthcare and Astral Foods
Assuming the 90 days trading horizon Life Healthcare is expected to generate 7.34 times less return on investment than Astral Foods. But when comparing it to its historical volatility, Life Healthcare is 1.14 times less risky than Astral Foods. It trades about 0.04 of its potential returns per unit of risk. Astral Foods is currently generating about 0.25 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Healthcare vs. Astral Foods
Performance |
| Timeline |
| Life Healthcare |
| Astral Foods |
Life Healthcare and Astral Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Healthcare and Astral Foods
The main advantage of trading using opposite Life Healthcare and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare 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.| Life Healthcare vs. Astoria Investments | Life Healthcare vs. Safari Investments RSA | Life Healthcare vs. Zeder Investments | Life Healthcare vs. Trematon Capital Investments |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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