Correlation Between Blue Star and Ashtead Technology

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

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

Diversification Opportunities for Blue Star and Ashtead Technology

0.07

Correlation Coefficient

Blue Star  Ashtead Technology

Significant diversification

The 3 months correlation between Blue and Ashtead is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Capital and Ashtead Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Technology and Blue Star 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 Blue Star Capital are associated (or correlated) with Ashtead Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Technology has no effect on the direction of Blue Star i.e., Blue Star and Ashtead Technology go up and down completely randomly.

Pair Corralation between Blue Star and Ashtead Technology

Assuming the 90 days trading horizon Blue Star Capital is expected to generate 43.05 times more return on investment than Ashtead Technology. However, Blue Star is 43.05 times more volatile than Ashtead Technology Holdings. It trades about 0.14 of its potential returns per unit of risk. Ashtead Technology Holdings is currently generating about 0.01 per unit of risk. If you would invest  350.00  in Blue Star Capital on December 29, 2024 and sell it today you would earn a total of  325.00  from holding Blue Star Capital or generate 92.86% return on investment over 90 days.

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

Blue Star Capital  vs.  Ashtead Technology Holdings

Blue Star Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Blue Star exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Blue Star and Ashtead Technology

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

The idea behind Blue Star Capital and Ashtead Technology Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.