Correlation Between Ashtead Group and FUYO GENERAL
Can any of the company-specific risk be diversified away by investing in both Ashtead Group and FUYO GENERAL 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 Group and FUYO GENERAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Group plc and FUYO GENERAL LEASE, you can compare the effects of market volatilities on Ashtead Group and FUYO GENERAL 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 Group with a short position of FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and FUYO GENERAL.
Diversification Opportunities for Ashtead Group and FUYO GENERAL
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashtead and FUYO is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE and Ashtead Group 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 Group plc are associated (or correlated) with FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of Ashtead Group i.e., Ashtead Group and FUYO GENERAL go up and down completely randomly.
Pair Corralation between Ashtead Group and FUYO GENERAL
Assuming the 90 days horizon Ashtead Group plc is expected to generate 1.39 times more return on investment than FUYO GENERAL. However, Ashtead Group is 1.39 times more volatile than FUYO GENERAL LEASE. It trades about 0.04 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about 0.03 per unit of risk. If you would invest 5,463 in Ashtead Group plc on September 3, 2024 and sell it today you would earn a total of 2,087 from holding Ashtead Group plc or generate 38.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Group plc vs. FUYO GENERAL LEASE
Performance |
| Timeline |
| Ashtead Group plc |
| FUYO GENERAL LEASE |
Ashtead Group and FUYO GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Group and FUYO GENERAL
The main advantage of trading using opposite Ashtead Group and FUYO GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Group position performs unexpectedly, FUYO GENERAL 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 FUYO GENERAL will offset losses from the drop in FUYO GENERAL's long position.| Ashtead Group vs. PENN NATL GAMING | Ashtead Group vs. Media and Games | Ashtead Group vs. CI GAMES SA | Ashtead Group vs. Hochschild Mining plc |
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Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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