Correlation Between Ashtead Technology and SupplyMe Capital

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

Diversification Opportunities for Ashtead Technology and SupplyMe Capital

0.59

Correlation Coefficient

Ashtead Technology  SupplyMe Capital

Very weak diversification

The 3 months correlation between Ashtead and SupplyMe is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and SupplyMe Capital PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SupplyMe Capital 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 SupplyMe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SupplyMe Capital PLC has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and SupplyMe Capital go up and down completely randomly.

Pair Corralation between Ashtead Technology and SupplyMe Capital

Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 0.28 times more return on investment than SupplyMe Capital. However, Ashtead Technology Holdings is 3.54 times less risky than SupplyMe Capital. It trades about 0.06 of its potential returns per unit of risk. SupplyMe Capital PLC is currently generating about -0.02 per unit of risk. If you would invest  31,324  in Ashtead Technology Holdings on September 29, 2024 and sell it today you would earn a total of  23,576  from holding Ashtead Technology Holdings or generate 75.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Ashtead Technology Holdings  vs.  SupplyMe Capital 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.

SupplyMe Capital PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SupplyMe Capital PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SupplyMe Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ashtead Technology and SupplyMe Capital

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

The idea behind Ashtead Technology Holdings and SupplyMe Capital 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.