Correlation Between Ashtead Gro and Solution Financial
Can any of the company-specific risk be diversified away by investing in both Ashtead Gro and Solution Financial 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 Solution Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Gro and Solution Financial, you can compare the effects of market volatilities on Ashtead Gro and Solution Financial 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 Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Gro and Solution Financial.
Diversification Opportunities for Ashtead Gro and Solution Financial
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ashtead and Solution is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Gro and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial 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 Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of Ashtead Gro i.e., Ashtead Gro and Solution Financial go up and down completely randomly.
Pair Corralation between Ashtead Gro and Solution Financial
Assuming the 90 days horizon Ashtead Gro is expected to generate 0.64 times more return on investment than Solution Financial. However, Ashtead Gro is 1.56 times less risky than Solution Financial. It trades about 0.16 of its potential returns per unit of risk. Solution Financial is currently generating about -0.07 per unit of risk. If you would invest 30,540 in Ashtead Gro on August 26, 2024 and sell it today you would earn a total of 1,822 from holding Ashtead Gro or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Gro vs. Solution Financial
Performance |
| Timeline |
| Ashtead Gro |
| Solution Financial |
Ashtead Gro and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Gro and Solution Financial
The main advantage of trading using opposite Ashtead Gro and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Gro position performs unexpectedly, Solution Financial 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 Solution Financial will offset losses from the drop in Solution Financial'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 |
| Solution Financial vs. Ashtead Group plc | Solution Financial vs. African Discovery Group | Solution Financial vs. Emeco Holdings Limited | Solution Financial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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