Correlation Between SBM OFFSHORE and Astral Foods

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

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

Diversification Opportunities for SBM OFFSHORE and Astral Foods

0.04

Correlation Coefficient

SBM OFFSHORE  Astral Foods

Significant diversification

The 3 months correlation between SBM and Astral is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE i.e., SBM OFFSHORE and Astral Foods go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and Astral Foods

Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 1.09 times less return on investment than Astral Foods. But when comparing it to its historical volatility, SBM OFFSHORE is 1.91 times less risky than Astral Foods. It trades about 0.06 of its potential returns per unit of risk. Astral Foods Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  780.00  in Astral Foods Limited on August 29, 2024 and sell it today you would earn a total of  170.00  from holding Astral Foods Limited or generate 21.79% return on investment over 90 days.

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

SBM OFFSHORE  vs.  Astral Foods Limited

SBM OFFSHORE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SBM OFFSHORE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, SBM OFFSHORE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Astral Foods Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astral Foods Limited are ranked lower than 9 (%) 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 December 2024.

Pair Trading with SBM OFFSHORE and Astral Foods

The main advantage of trading using opposite SBM OFFSHORE and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE 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 SBM OFFSHORE 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.