Correlation Between Ashley Services and Advanced Braking

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Can any of the company-specific risk be diversified away by investing in both Ashley Services and Advanced Braking 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 Ashley Services and Advanced Braking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashley Services Group and Advanced Braking Technology, you can compare the effects of market volatilities on Ashley Services and Advanced Braking 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 Ashley Services with a short position of Advanced Braking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashley Services and Advanced Braking.

Diversification Opportunities for Ashley Services and Advanced Braking

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Ashley and Advanced is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ashley Services Group and Advanced Braking Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Braking Tec and Ashley Services 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 Ashley Services Group are associated (or correlated) with Advanced Braking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Braking Tec has no effect on the direction of Ashley Services i.e., Ashley Services and Advanced Braking go up and down completely randomly.

Pair Corralation between Ashley Services and Advanced Braking

Assuming the 90 days trading horizon Ashley Services Group is expected to under-perform the Advanced Braking. In addition to that, Ashley Services is 1.94 times more volatile than Advanced Braking Technology. It trades about -0.06 of its total potential returns per unit of risk. Advanced Braking Technology is currently generating about 0.11 per unit of volatility. If you would invest  8.00  in Advanced Braking Technology on October 22, 2024 and sell it today you would earn a total of  0.30  from holding Advanced Braking Technology or generate 3.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ashley Services Group  vs.  Advanced Braking Technology

 Performance 
       Timeline  
Ashley Services Group 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ashley Services Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Ashley Services may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Advanced Braking Tec 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Braking Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Advanced Braking may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ashley Services and Advanced Braking Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ashley Services and Advanced Braking

The main advantage of trading using opposite Ashley Services and Advanced Braking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashley Services position performs unexpectedly, Advanced Braking 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 Advanced Braking will offset losses from the drop in Advanced Braking's long position.
The idea behind Ashley Services Group and Advanced Braking Technology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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