Correlation Between Ashtead Gro and FlexShopper

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

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

Diversification Opportunities for Ashtead Gro and FlexShopper

0.2

Correlation Coefficient

Ashtead Gro  FlexShopper

Modest diversification

The 3 months correlation between Ashtead and FlexShopper is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Gro and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper 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 FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of Ashtead Gro i.e., Ashtead Gro and FlexShopper go up and down completely randomly.

Pair Corralation between Ashtead Gro and FlexShopper

Assuming the 90 days horizon Ashtead Gro is expected to under-perform the FlexShopper. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ashtead Gro is 3.47 times less risky than FlexShopper. The pink sheet trades about -0.08 of its potential returns per unit of risk. The FlexShopper is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  161.00  in FlexShopper on December 30, 2024 and sell it today you would lose (26.00) from holding FlexShopper or give up 16.15% of portfolio value over 90 days.

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

Ashtead Gro  vs.  FlexShopper

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.

FlexShopper

Risk-Adjusted Performance

Very Weak

Over the last 90 days FlexShopper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Pair Trading with Ashtead Gro and FlexShopper

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

The idea behind Ashtead Gro and FlexShopper 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.