Correlation Between Ashtead Technology and International Biotechnology
Can any of the company-specific risk be diversified away by investing in both Ashtead Technology and International Biotechnology 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 International Biotechnology 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 International Biotechnology Trust, you can compare the effects of market volatilities on Ashtead Technology and International Biotechnology 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 International Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and International Biotechnology.
Diversification Opportunities for Ashtead Technology and International Biotechnology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ashtead and International is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and International Biotechnology Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Biotechnology 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 International Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Biotechnology has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and International Biotechnology go up and down completely randomly.
Pair Corralation between Ashtead Technology and International Biotechnology
Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 2.08 times more return on investment than International Biotechnology. However, Ashtead Technology is 2.08 times more volatile than International Biotechnology Trust. It trades about 0.06 of its potential returns per unit of risk. International Biotechnology Trust is currently generating about 0.02 per unit of risk. If you would invest 31,274 in Ashtead Technology Holdings on September 3, 2024 and sell it today you would earn a total of 23,826 from holding Ashtead Technology Holdings or generate 76.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ashtead Technology Holdings vs. International Biotechnology Tr
Performance |
| Timeline |
| Ashtead Technology |
| International Biotechnology |
Ashtead Technology and International Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Technology and International Biotechnology
The main advantage of trading using opposite Ashtead Technology and International Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology position performs unexpectedly, International Biotechnology 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 International Biotechnology will offset losses from the drop in International Biotechnology's long position.| Ashtead Technology vs. International Biotechnology Trust | Ashtead Technology vs. Smithson Investment Trust | Ashtead Technology vs. Air Products Chemicals | Ashtead Technology vs. Monks Investment Trust |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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