Correlation Between ASTRA INTERNATIONAL and Welltower

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

By analyzing existing cross correlation between ASTRA INTERNATIONAL and Welltower, you can compare the effects of market volatilities on ASTRA INTERNATIONAL and Welltower 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 ASTRA INTERNATIONAL with a short position of Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASTRA INTERNATIONAL and Welltower.

Diversification Opportunities for ASTRA INTERNATIONAL and Welltower

-0.43

Correlation Coefficient

ASTRA INTERNATIONAL  Welltower

Very good diversification

The 3 months correlation between ASTRA and Welltower is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ASTRA INTERNATIONAL and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL are associated (or correlated) with Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of ASTRA INTERNATIONAL i.e., ASTRA INTERNATIONAL and Welltower go up and down completely randomly.

Pair Corralation between ASTRA INTERNATIONAL and Welltower

Assuming the 90 days trading horizon ASTRA INTERNATIONAL is expected to generate 1.9 times less return on investment than Welltower. In addition to that, ASTRA INTERNATIONAL is 3.64 times more volatile than Welltower. It trades about 0.03 of its total potential returns per unit of risk. Welltower is currently generating about 0.24 per unit of volatility. If you would invest  10,768  in Welltower on September 2, 2024 and sell it today you would earn a total of  2,322  from holding Welltower or generate 21.56% return on investment over 90 days.

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

ASTRA INTERNATIONAL  vs.  Welltower

ASTRA INTERNATIONAL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASTRA INTERNATIONAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ASTRA INTERNATIONAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Welltower

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Welltower reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASTRA INTERNATIONAL and Welltower

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

The idea behind ASTRA INTERNATIONAL and Welltower 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.