Correlation Between Ashtrom and Melisron

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

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

Diversification Opportunities for Ashtrom and Melisron

0.97

Correlation Coefficient

Ashtrom  Melisron

Almost no diversification

The 3 months correlation between Ashtrom and Melisron is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ashtrom Group and Melisron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melisron and Ashtrom 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 Ashtrom Group are associated (or correlated) with Melisron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melisron has no effect on the direction of Ashtrom i.e., Ashtrom and Melisron go up and down completely randomly.

Pair Corralation between Ashtrom and Melisron

Assuming the 90 days trading horizon Ashtrom Group is expected to generate 1.35 times more return on investment than Melisron. However, Ashtrom is 1.35 times more volatile than Melisron. It trades about 0.26 of its potential returns per unit of risk. Melisron is currently generating about 0.23 per unit of risk. If you would invest  500,100  in Ashtrom Group on September 3, 2024 and sell it today you would earn a total of  136,700  from holding Ashtrom Group or generate 27.33% return on investment over 90 days.

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

Ashtrom Group  vs.  Melisron

Ashtrom Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtrom Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ashtrom sustained solid returns over the last few months and may actually be approaching a breakup point.

Melisron

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Melisron are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Melisron sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashtrom and Melisron

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

The idea behind Ashtrom Group and Melisron 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.