Correlation Between Ashtead Technology and Central Asia
Can any of the company-specific risk be diversified away by investing in both Ashtead Technology and Central Asia 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 Central Asia 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 Central Asia Metals, you can compare the effects of market volatilities on Ashtead Technology and Central Asia 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 Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and Central Asia.
Diversification Opportunities for Ashtead Technology and Central Asia
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ashtead and Central is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals 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 Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and Central Asia go up and down completely randomly.
Pair Corralation between Ashtead Technology and Central Asia
Assuming the 90 days trading horizon Ashtead Technology is expected to generate 1.1 times less return on investment than Central Asia. But when comparing it to its historical volatility, Ashtead Technology Holdings is 1.1 times less risky than Central Asia. It trades about 0.2 of its potential returns per unit of risk. Central Asia Metals is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 14,880 in Central Asia Metals on January 3, 2025 and sell it today you would earn a total of 1,580 from holding Central Asia Metals or generate 10.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Technology Holdings vs. Central Asia Metals
Performance |
| Timeline |
| Ashtead Technology |
| Central Asia Metals |
Ashtead Technology and Central Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Technology and Central Asia
The main advantage of trading using opposite Ashtead Technology and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.| Ashtead Technology vs. Endo International PLC | Ashtead Technology vs. Pantheon Resources | Ashtead Technology vs. Direct Line Insurance | Ashtead Technology vs. HAL Trust |
| Central Asia vs. Synthomer plc | Central Asia vs. Extra Space Storage | Central Asia vs. Take Two Interactive Software | Central Asia vs. Capital Drilling |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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