Correlation Between United Internet and Ashtead Group

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

By analyzing existing cross correlation between United Internet AG and Ashtead Group PLC, you can compare the effects of market volatilities on United Internet and Ashtead Group 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 United Internet with a short position of Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Ashtead Group.

Diversification Opportunities for United Internet and Ashtead Group

-0.49

Correlation Coefficient

United Internet  Ashtead Group

Very good diversification

The 3 months correlation between United and Ashtead is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Ashtead Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group PLC and United Internet 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 United Internet AG are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group PLC has no effect on the direction of United Internet i.e., United Internet and Ashtead Group go up and down completely randomly.

Pair Corralation between United Internet and Ashtead Group

Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Ashtead Group. But the stock apears to be less risky and, when comparing its historical volatility, United Internet AG is 1.02 times less risky than Ashtead Group. The stock trades about -0.11 of its potential returns per unit of risk. The Ashtead Group PLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  534,600  in Ashtead Group PLC on September 15, 2024 and sell it today you would lose (15,000) from holding Ashtead Group PLC or give up 2.81% of portfolio value over 90 days.

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

United Internet AG  vs.  Ashtead Group PLC

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ashtead Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with United Internet and Ashtead Group

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

The idea behind United Internet AG and Ashtead Group PLC 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.