Correlation Between RCL Foods and Astral Foods
Can any of the company-specific risk be diversified away by investing in both RCL Foods 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 RCL Foods and Astral Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCL Foods and Astral Foods, you can compare the effects of market volatilities on RCL Foods 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 RCL Foods with a short position of Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCL Foods and Astral Foods.
Diversification Opportunities for RCL Foods and Astral Foods
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RCL and Astral is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods and Astral Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods and RCL 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 RCL Foods 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 RCL Foods i.e., RCL Foods and Astral Foods go up and down completely randomly.
Pair Corralation between RCL Foods and Astral Foods
Assuming the 90 days trading horizon RCL Foods is expected to generate 90.86 times less return on investment than Astral Foods. But when comparing it to its historical volatility, RCL Foods is 1.68 times less risky than Astral Foods. It trades about 0.0 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCL Foods vs. Astral Foods
Performance |
| Timeline |
| RCL Foods |
| Astral Foods |
RCL Foods and Astral Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCL Foods and Astral Foods
The main advantage of trading using opposite RCL Foods and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCL Foods 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.| RCL Foods vs. Standard Bank Group | RCL Foods vs. Ascendis Health | RCL Foods vs. City Lodge Hotels | RCL Foods vs. Advtech |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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