Correlation Between Ashtead Technology and Quadrise Plc

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

Diversification Opportunities for Ashtead Technology and Quadrise Plc

0.01

Correlation Coefficient

Ashtead Technology  Quadrise Plc

Significant diversification

The 3 months correlation between Ashtead and Quadrise is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Quadrise Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadrise Plc 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 Quadrise Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadrise Plc has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and Quadrise Plc go up and down completely randomly.

Pair Corralation between Ashtead Technology and Quadrise Plc

Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to under-perform the Quadrise Plc. But the stock apears to be less risky and, when comparing its historical volatility, Ashtead Technology Holdings is 2.71 times less risky than Quadrise Plc. The stock trades about -0.04 of its potential returns per unit of risk. The Quadrise Plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  137.00  in Quadrise Plc on October 9, 2024 and sell it today you would earn a total of  433.00  from holding Quadrise Plc or generate 316.06% return on investment over 90 days.

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

Ashtead Technology Holdings  vs.  Quadrise Plc

Ashtead Technology

Risk-Adjusted Performance

0 of 100

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.

Quadrise Plc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Quadrise Plc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Quadrise Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashtead Technology and Quadrise Plc

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

The idea behind Ashtead Technology Holdings and Quadrise 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.