Correlation Between MHP Hotel and Astral Foods

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

By analyzing existing cross correlation between MHP Hotel AG and Astral Foods Limited, you can compare the effects of market volatilities on MHP Hotel 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 MHP Hotel with a short position of Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of MHP Hotel and Astral Foods.

Diversification Opportunities for MHP Hotel and Astral Foods

-0.02

Correlation Coefficient

MHP Hotel  Astral Foods

Good diversification

The 3 months correlation between MHP and Astral is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding MHP Hotel AG and Astral Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods Limited and MHP Hotel 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 MHP Hotel AG 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 Limited has no effect on the direction of MHP Hotel i.e., MHP Hotel and Astral Foods go up and down completely randomly.

Pair Corralation between MHP Hotel and Astral Foods

Assuming the 90 days trading horizon MHP Hotel is expected to generate 2.03 times less return on investment than Astral Foods. In addition to that, MHP Hotel is 1.97 times more volatile than Astral Foods Limited. It trades about 0.03 of its total potential returns per unit of risk. Astral Foods Limited is currently generating about 0.13 per unit of volatility. If you would invest  840.00  in Astral Foods Limited on September 3, 2024 and sell it today you would earn a total of  110.00  from holding Astral Foods Limited or generate 13.1% return on investment over 90 days.

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

MHP Hotel AG  vs.  Astral Foods Limited

MHP Hotel AG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MHP Hotel AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MHP Hotel is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with MHP Hotel and Astral Foods

The main advantage of trading using opposite MHP Hotel and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MHP Hotel 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.

The idea behind MHP Hotel AG and Astral Foods Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..