Correlation Between Astral Foods and JJ SNACK

Can any of the company-specific risk be diversified away by investing in both Astral Foods and JJ SNACK 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 JJ SNACK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astral Foods Limited and JJ SNACK FOODS, you can compare the effects of market volatilities on Astral Foods and JJ SNACK 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 JJ SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and JJ SNACK.

Diversification Opportunities for Astral Foods and JJ SNACK

0.28

Correlation Coefficient

Astral Foods  JJ SNACK

Modest diversification

The 3 months correlation between Astral and JJ1 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS 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 Limited are associated (or correlated) with JJ SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of Astral Foods i.e., Astral Foods and JJ SNACK go up and down completely randomly.

Pair Corralation between Astral Foods and JJ SNACK

Assuming the 90 days trading horizon Astral Foods is expected to generate 1.36 times less return on investment than JJ SNACK. In addition to that, Astral Foods is 1.54 times more volatile than JJ SNACK FOODS. It trades about 0.07 of its total potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.15 per unit of volatility. If you would invest  15,300  in JJ SNACK FOODS on September 8, 2024 and sell it today you would earn a total of  1,000.00  from holding JJ SNACK FOODS or generate 6.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Astral Foods Limited  vs.  JJ SNACK FOODS

Astral Foods Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Astral Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

JJ SNACK FOODS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JJ SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Astral Foods and JJ SNACK

The main advantage of trading using opposite Astral Foods and JJ SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astral Foods position performs unexpectedly, JJ SNACK 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 JJ SNACK will offset losses from the drop in JJ SNACK's long position.

The idea behind Astral Foods Limited and JJ SNACK FOODS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.