Correlation Between Ashtead Technology and Veolia Environnement

Can any of the company-specific risk be diversified away by investing in both Ashtead Technology and Veolia Environnement 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 Veolia Environnement 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 Veolia Environnement VE, you can compare the effects of market volatilities on Ashtead Technology and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and Veolia Environnement.

Diversification Opportunities for Ashtead Technology and Veolia Environnement

-0.36

Correlation Coefficient

Ashtead Technology  Veolia Environnement

Very good diversification

The 3 months correlation between Ashtead and Veolia is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and Veolia Environnement go up and down completely randomly.

Pair Corralation between Ashtead Technology and Veolia Environnement

Assuming the 90 days trading horizon Ashtead Technology is expected to generate 24.17 times less return on investment than Veolia Environnement. In addition to that, Ashtead Technology is 2.6 times more volatile than Veolia Environnement VE. It trades about 0.0 of its total potential returns per unit of risk. Veolia Environnement VE is currently generating about 0.24 per unit of volatility. If you would invest  2,690  in Veolia Environnement VE on December 25, 2024 and sell it today you would earn a total of  461.00  from holding Veolia Environnement VE or generate 17.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ashtead Technology Holdings  vs.  Veolia Environnement VE

Ashtead Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashtead Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Veolia Environnement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veolia Environnement VE are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Veolia Environnement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashtead Technology and Veolia Environnement

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

The idea behind Ashtead Technology Holdings and Veolia Environnement VE 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.