Correlation Between Astral Foods and Paychex

Can any of the company-specific risk be diversified away by investing in both Astral Foods and Paychex 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 Paychex 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 Paychex, you can compare the effects of market volatilities on Astral Foods and Paychex 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 Paychex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astral Foods and Paychex.

Diversification Opportunities for Astral Foods and Paychex

0.06

Correlation Coefficient

Astral Foods  Paychex

Significant diversification

The 3 months correlation between Astral and Paychex is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and Paychex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paychex 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 Paychex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paychex has no effect on the direction of Astral Foods i.e., Astral Foods and Paychex go up and down completely randomly.

Pair Corralation between Astral Foods and Paychex

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 1.78 times more return on investment than Paychex. However, Astral Foods is 1.78 times more volatile than Paychex. It trades about 0.29 of its potential returns per unit of risk. Paychex is currently generating about -0.05 per unit of risk. If you would invest  850.00  in Astral Foods Limited on September 19, 2024 and sell it today you would earn a total of  110.00  from holding Astral Foods Limited or generate 12.94% return on investment over 90 days.

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

Astral Foods Limited  vs.  Paychex

Astral Foods Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Astral Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Paychex

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paychex are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Paychex reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and Paychex

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

The idea behind Astral Foods Limited and Paychex 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.