Correlation Between Ashtead Gro and African Discovery
Can any of the company-specific risk be diversified away by investing in both Ashtead Gro and African Discovery 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 Gro and African Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Gro and African Discovery Group, you can compare the effects of market volatilities on Ashtead Gro and African Discovery 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 Gro with a short position of African Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Gro and African Discovery.
Diversification Opportunities for Ashtead Gro and African Discovery
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashtead and African is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Gro and African Discovery Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Discovery and Ashtead Gro 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 Gro are associated (or correlated) with African Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Discovery has no effect on the direction of Ashtead Gro i.e., Ashtead Gro and African Discovery go up and down completely randomly.
Pair Corralation between Ashtead Gro and African Discovery
Assuming the 90 days horizon Ashtead Gro is expected to under-perform the African Discovery. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ashtead Gro is 5.69 times less risky than African Discovery. The pink sheet trades about -0.06 of its potential returns per unit of risk. The African Discovery Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.60 in African Discovery Group on November 2, 2024 and sell it today you would earn a total of 0.30 from holding African Discovery Group or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Ashtead Gro vs. African Discovery Group
Performance |
| Timeline |
| Ashtead Gro |
| African Discovery |
Ashtead Gro and African Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Gro and African Discovery
The main advantage of trading using opposite Ashtead Gro and African Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Gro position performs unexpectedly, African Discovery 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 African Discovery will offset losses from the drop in African Discovery's long position.| Ashtead Gro vs. African Discovery Group | Ashtead Gro vs. BOC Aviation Limited | Ashtead Gro vs. Black Diamond Group | Ashtead Gro vs. Alta Equipment Group |
| African Discovery vs. Black Diamond Group | African Discovery vs. Alta Equipment Group | African Discovery vs. Ashtead Group plc | African Discovery vs. BOC Aviation Limited |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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