Correlation Between Emeco Holdings and Ashtead Gro

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

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

Diversification Opportunities for Emeco Holdings and Ashtead Gro

-0.77

Correlation Coefficient

Emeco Holdings  Ashtead Gro

Pay attention - limited upside

The 3 months correlation between Emeco and Ashtead is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Emeco Holdings Limited and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro and Emeco Holdings 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 Emeco Holdings Limited 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 Emeco Holdings i.e., Emeco Holdings and Ashtead Gro go up and down completely randomly.

Pair Corralation between Emeco Holdings and Ashtead Gro

Assuming the 90 days horizon Emeco Holdings Limited is expected to generate 0.58 times more return on investment than Ashtead Gro. However, Emeco Holdings Limited is 1.72 times less risky than Ashtead Gro. It trades about 0.13 of its potential returns per unit of risk. Ashtead Gro is currently generating about -0.06 per unit of risk. If you would invest  49.00  in Emeco Holdings Limited on December 29, 2024 and sell it today you would earn a total of  4.00  from holding Emeco Holdings Limited or generate 8.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Emeco Holdings Limited  vs.  Ashtead Gro

Emeco Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emeco Holdings Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Emeco Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Emeco Holdings and Ashtead Gro

The main advantage of trading using opposite Emeco Holdings and Ashtead Gro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emeco Holdings 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 Emeco Holdings Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.