Correlation Between Astral Foods and S A P

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

Diversification Opportunities for Astral Foods and S A P

0.47

Correlation Coefficient

Astral Foods  S A P

Very weak diversification

The 3 months correlation between Astral and SAP is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Astral Foods Limited and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Astral Foods i.e., Astral Foods and S A P go up and down completely randomly.

Pair Corralation between Astral Foods and S A P

Assuming the 90 days trading horizon Astral Foods Limited is expected to generate 7.18 times more return on investment than S A P. However, Astral Foods is 7.18 times more volatile than SAP SE. It trades about 0.03 of its potential returns per unit of risk. SAP SE is currently generating about 0.14 per unit of risk. If you would invest  855.00  in Astral Foods Limited on September 22, 2024 and sell it today you would earn a total of  100.00  from holding Astral Foods Limited or generate 11.7% return on investment over 90 days.

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

Astral Foods Limited  vs.  SAP SE

Astral Foods Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Astral Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SAP SE

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, S A P unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astral Foods and S A P

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

The idea behind Astral Foods Limited and SAP SE 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.