Correlation Between Ashtead Gro and Ashtead Group

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

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

Diversification Opportunities for Ashtead Gro and Ashtead Group

0.97

Correlation Coefficient

Ashtead Gro  Ashtead Group

Almost no diversification

The 3 months correlation between Ashtead and Ashtead is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Gro 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 Ashtead Gro 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 Gro 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 Ashtead Gro i.e., Ashtead Gro and Ashtead Group go up and down completely randomly.

Pair Corralation between Ashtead Gro and Ashtead Group

Assuming the 90 days horizon Ashtead Gro is expected to generate 0.68 times more return on investment than Ashtead Group. However, Ashtead Gro is 1.47 times less risky than Ashtead Group. It trades about -0.08 of its potential returns per unit of risk. Ashtead Group plc is currently generating about -0.06 per unit of risk. If you would invest  24,527  in Ashtead Gro on December 30, 2024 and sell it today you would lose (2,277) from holding Ashtead Gro or give up 9.28% of portfolio value over 90 days.

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

Ashtead Gro  vs.  Ashtead Group plc

Ashtead Gro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashtead Gro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ashtead Group plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashtead Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ashtead Gro and Ashtead Group

The main advantage of trading using opposite Ashtead Gro and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Gro 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 Ashtead Gro 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.