Correlation Between Ashland Global and Avantor

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

By analyzing existing cross correlation between Ashland Global Holdings and Avantor, you can compare the effects of market volatilities on Ashland Global and Avantor 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 Ashland Global with a short position of Avantor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and Avantor.

Diversification Opportunities for Ashland Global and Avantor

0.81

Correlation Coefficient

Ashland Global  Avantor

Very poor diversification

The 3 months correlation between Ashland and Avantor is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Avantor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantor and Ashland Global 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 Ashland Global Holdings are associated (or correlated) with Avantor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantor has no effect on the direction of Ashland Global i.e., Ashland Global and Avantor go up and down completely randomly.

Pair Corralation between Ashland Global and Avantor

Considering the 90-day investment horizon Ashland Global Holdings is expected to under-perform the Avantor. In addition to that, Ashland Global is 1.51 times more volatile than Avantor. It trades about -0.22 of its total potential returns per unit of risk. Avantor is currently generating about -0.19 per unit of volatility. If you would invest  2,246  in Avantor on August 31, 2024 and sell it today you would lose (140.00) from holding Avantor or give up 6.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Ashland Global Holdings  vs.  Avantor

Ashland Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashland Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Avantor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ashland Global and Avantor

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

The idea behind Ashland Global Holdings and Avantor 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.