Correlation Between Perma Pipe and Ashford

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

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

Diversification Opportunities for Perma Pipe and Ashford

0.8

Correlation Coefficient

Perma Pipe  Ashford

Very poor diversification

The 3 months correlation between Perma and Ashford is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Perma Pipe International Holdi and Ashford in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford and Perma Pipe 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 Perma Pipe International Holdings are associated (or correlated) with Ashford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford has no effect on the direction of Perma Pipe i.e., Perma Pipe and Ashford go up and down completely randomly.

Pair Corralation between Perma Pipe and Ashford

If you would invest  1,195  in Perma Pipe International Holdings on September 12, 2024 and sell it today you would earn a total of  491.00  from holding Perma Pipe International Holdings or generate 41.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Perma Pipe International Holdi  vs.  Ashford

Perma Pipe Internati

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Pipe International Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, Perma Pipe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ashford

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashford has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ashford is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Perma Pipe and Ashford

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

The idea behind Perma Pipe International Holdings and Ashford 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.