Correlation Between Ashtead Group and HyreCar

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

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

Diversification Opportunities for Ashtead Group and HyreCar

-0.67

Correlation Coefficient

Ashtead Group  HyreCar

Excellent diversification

The 3 months correlation between Ashtead and HyreCar is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and HyreCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HyreCar and Ashtead Group 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 Ashtead Group plc are associated (or correlated) with HyreCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HyreCar has no effect on the direction of Ashtead Group i.e., Ashtead Group and HyreCar go up and down completely randomly.

Pair Corralation between Ashtead Group and HyreCar

Assuming the 90 days horizon Ashtead Group plc is expected to generate 0.15 times more return on investment than HyreCar. However, Ashtead Group plc is 6.79 times less risky than HyreCar. It trades about 0.15 of its potential returns per unit of risk. HyreCar is currently generating about -0.13 per unit of risk. If you would invest  6,825  in Ashtead Group plc on September 12, 2024 and sell it today you would earn a total of  1,237  from holding Ashtead Group plc or generate 18.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Ashtead Group plc  vs.  HyreCar

Ashtead Group plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtead Group plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Ashtead Group reported solid returns over the last few months and may actually be approaching a breakup point.

HyreCar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HyreCar 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 technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ashtead Group and HyreCar

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

The idea behind Ashtead Group plc and HyreCar 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.