Correlation Between Ashtead Technology and Vulcan Materials

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

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

Diversification Opportunities for Ashtead Technology and Vulcan Materials

0.57

Correlation Coefficient

Ashtead Technology  Vulcan Materials

Very weak diversification

The 3 months correlation between Ashtead and Vulcan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and Ashtead Technology 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 Technology Holdings are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and Vulcan Materials go up and down completely randomly.

Pair Corralation between Ashtead Technology and Vulcan Materials

Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 1.6 times more return on investment than Vulcan Materials. However, Ashtead Technology is 1.6 times more volatile than Vulcan Materials Co. It trades about 0.02 of its potential returns per unit of risk. Vulcan Materials Co is currently generating about -0.09 per unit of risk. If you would invest  54,000  in Ashtead Technology Holdings on December 24, 2024 and sell it today you would earn a total of  600.00  from holding Ashtead Technology Holdings or generate 1.11% return on investment over 90 days.

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

Ashtead Technology Holdings  vs.  Vulcan Materials Co

Ashtead Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtead Technology Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ashtead Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vulcan Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Materials Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ashtead Technology and Vulcan Materials

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

The idea behind Ashtead Technology Holdings and Vulcan Materials Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..