Correlation Between Black Diamond and Ashtead Gro

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

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

Diversification Opportunities for Black Diamond and Ashtead Gro

0.74

Correlation Coefficient

Black Diamond  Ashtead Gro

Poor diversification

The 3 months correlation between Black and Ashtead is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Group and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro and Black Diamond 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 Black Diamond Group are associated (or correlated) with Ashtead Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Gro has no effect on the direction of Black Diamond i.e., Black Diamond and Ashtead Gro go up and down completely randomly.

Pair Corralation between Black Diamond and Ashtead Gro

Assuming the 90 days horizon Black Diamond Group is expected to under-perform the Ashtead Gro. But the otc stock apears to be less risky and, when comparing its historical volatility, Black Diamond Group is 1.68 times less risky than Ashtead Gro. The otc stock trades about -0.2 of its potential returns per unit of risk. The Ashtead Gro is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  24,527  in Ashtead Gro on December 29, 2024 and sell it today you would lose (1,742) from holding Ashtead Gro or give up 7.1% of portfolio value over 90 days.

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

Black Diamond Group  vs.  Ashtead Gro

Black Diamond Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Black Diamond Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Black Diamond and Ashtead Gro

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

The idea behind Black Diamond Group and Ashtead Gro 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.