Correlation Between Ashtead Technology and Givaudan
Can any of the company-specific risk be diversified away by investing in both Ashtead Technology and Givaudan 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 Technology and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Technology Holdings and Givaudan SA, you can compare the effects of market volatilities on Ashtead Technology and Givaudan 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 Technology with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and Givaudan.
Diversification Opportunities for Ashtead Technology and Givaudan
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ashtead and Givaudan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Ashtead Technology 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 Technology Holdings are associated (or correlated) with Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and Givaudan go up and down completely randomly.
Pair Corralation between Ashtead Technology and Givaudan
Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 2.08 times more return on investment than Givaudan. However, Ashtead Technology is 2.08 times more volatile than Givaudan SA. It trades about -0.06 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.25 per unit of risk. If you would invest 55,000 in Ashtead Technology Holdings on August 29, 2024 and sell it today you would lose (2,200) from holding Ashtead Technology Holdings or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Technology Holdings vs. Givaudan SA
Performance |
| Timeline |
| Ashtead Technology |
| Givaudan SA |
Ashtead Technology and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Technology and Givaudan
The main advantage of trading using opposite Ashtead Technology and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Ashtead Technology vs. Zoom Video Communications | Ashtead Technology vs. Enbridge | Ashtead Technology vs. Endo International PLC | Ashtead Technology vs. Diversified Energy |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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