Correlation Between TFS FINANCIAL and Astral Foods

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

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

Diversification Opportunities for TFS FINANCIAL and Astral Foods

0.15

Correlation Coefficient

TFS FINANCIAL  Astral Foods

Average diversification

The 3 months correlation between TFS and Astral is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL i.e., TFS FINANCIAL and Astral Foods go up and down completely randomly.

Pair Corralation between TFS FINANCIAL and Astral Foods

Assuming the 90 days trading horizon TFS FINANCIAL is expected to generate 1.2 times more return on investment than Astral Foods. However, TFS FINANCIAL is 1.2 times more volatile than Astral Foods Limited. It trades about 0.12 of its potential returns per unit of risk. Astral Foods Limited is currently generating about 0.11 per unit of risk. If you would invest  1,171  in TFS FINANCIAL on September 4, 2024 and sell it today you would earn a total of  169.00  from holding TFS FINANCIAL or generate 14.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

TFS FINANCIAL  vs.  Astral Foods Limited

TFS FINANCIAL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TFS FINANCIAL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TFS FINANCIAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Astral Foods Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 8 (%) 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.

Pair Trading with TFS FINANCIAL and Astral Foods

The main advantage of trading using opposite TFS FINANCIAL and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS FINANCIAL 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 TFS FINANCIAL 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.