Correlation Between Aehr Test and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Aehr Test and Asbury Automotive 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 Aehr Test and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aehr Test Systems and Asbury Automotive Group, you can compare the effects of market volatilities on Aehr Test and Asbury Automotive 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 Aehr Test with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aehr Test and Asbury Automotive.
Diversification Opportunities for Aehr Test and Asbury Automotive
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aehr and Asbury is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aehr Test Systems and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Aehr Test 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 Aehr Test Systems are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Aehr Test i.e., Aehr Test and Asbury Automotive go up and down completely randomly.
Pair Corralation between Aehr Test and Asbury Automotive
Given the investment horizon of 90 days Aehr Test is expected to generate 3.93 times less return on investment than Asbury Automotive. In addition to that, Aehr Test is 2.3 times more volatile than Asbury Automotive Group. It trades about 0.01 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.05 per unit of volatility. If you would invest 17,741 in Asbury Automotive Group on September 4, 2024 and sell it today you would earn a total of 8,761 from holding Asbury Automotive Group or generate 49.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aehr Test Systems vs. Asbury Automotive Group
Performance |
| Timeline |
| Aehr Test Systems |
| Asbury Automotive |
Aehr Test and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aehr Test and Asbury Automotive
The main advantage of trading using opposite Aehr Test and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aehr Test position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| Aehr Test vs. Photronics | Aehr Test vs. Lam Research Corp | Aehr Test vs. KLA Tencor | Aehr Test vs. Kulicke and Soffa |
| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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