Correlation Between Ashtead Technology and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Ashtead Technology and Lundin Mining 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 Lundin Mining 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 Lundin Mining Corp, you can compare the effects of market volatilities on Ashtead Technology and Lundin Mining 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 Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and Lundin Mining.
Diversification Opportunities for Ashtead Technology and Lundin Mining
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ashtead and Lundin is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp 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 Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and Lundin Mining go up and down completely randomly.
Pair Corralation between Ashtead Technology and Lundin Mining
Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to under-perform the Lundin Mining. But the stock apears to be less risky and, when comparing its historical volatility, Ashtead Technology Holdings is 1.06 times less risky than Lundin Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Lundin Mining Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 10,880 in Lundin Mining Corp on August 29, 2024 and sell it today you would lose (20.00) from holding Lundin Mining Corp or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Technology Holdings vs. Lundin Mining Corp
Performance |
| Timeline |
| Ashtead Technology |
| Lundin Mining Corp |
Ashtead Technology and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Technology and Lundin Mining
The main advantage of trading using opposite Ashtead Technology and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| Ashtead Technology vs. Zoom Video Communications | Ashtead Technology vs. Enbridge | Ashtead Technology vs. Endo International PLC | Ashtead Technology vs. Diversified Energy |
| Lundin Mining vs. Playtech Plc | Lundin Mining vs. Naturhouse Health SA | Lundin Mining vs. Cardinal Health | Lundin Mining vs. Naked Wines plc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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