Correlation Between Frontier Energy and Astec Industries

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

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

Diversification Opportunities for Frontier Energy and Astec Industries

0.0

Correlation Coefficient

Frontier Energy  Astec Industries

Pay attention - limited upside

The 3 months correlation between Frontier and Astec is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Energy Corp and Astec Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astec Industries and Frontier Energy 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 Frontier Energy Corp are associated (or correlated) with Astec Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astec Industries has no effect on the direction of Frontier Energy i.e., Frontier Energy and Astec Industries go up and down completely randomly.

Pair Corralation between Frontier Energy and Astec Industries

If you would invest  0.00  in Frontier Energy Corp on February 23, 2024 and sell it today you would earn a total of  0.00  from holding Frontier Energy Corp or generate 0.0% return on investment over 90 days.

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

Frontier Energy Corp  vs.  Astec Industries

Frontier Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Frontier Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Astec Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astec Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Astec Industries is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Frontier Energy and Astec Industries

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

The idea behind Frontier Energy Corp and Astec Industries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.