Correlation Between Ashtead Technology and K3 Business
Can any of the company-specific risk be diversified away by investing in both Ashtead Technology and K3 Business 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 K3 Business 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 K3 Business Technology, you can compare the effects of market volatilities on Ashtead Technology and K3 Business 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 K3 Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Technology and K3 Business.
Diversification Opportunities for Ashtead Technology and K3 Business
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ashtead and KBT is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Technology Holdings and K3 Business Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K3 Business Technology 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 K3 Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K3 Business Technology has no effect on the direction of Ashtead Technology i.e., Ashtead Technology and K3 Business go up and down completely randomly.
Pair Corralation between Ashtead Technology and K3 Business
Assuming the 90 days trading horizon Ashtead Technology Holdings is expected to generate 2.16 times more return on investment than K3 Business. However, Ashtead Technology is 2.16 times more volatile than K3 Business Technology. It trades about 0.05 of its potential returns per unit of risk. K3 Business Technology is currently generating about -0.14 per unit of risk. If you would invest 38,646 in Ashtead Technology Holdings on August 31, 2024 and sell it today you would earn a total of 16,454 from holding Ashtead Technology Holdings or generate 42.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Ashtead Technology Holdings vs. K3 Business Technology
Performance |
| Timeline |
| Ashtead Technology |
| K3 Business Technology |
Ashtead Technology and K3 Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Technology and K3 Business
The main advantage of trading using opposite Ashtead Technology and K3 Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Technology position performs unexpectedly, K3 Business 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 K3 Business will offset losses from the drop in K3 Business' long position.| Ashtead Technology vs. Zoom Video Communications | Ashtead Technology vs. Enbridge | Ashtead Technology vs. Coor Service Management | Ashtead Technology vs. Surgical Science Sweden |
| K3 Business vs. CVR Energy | K3 Business vs. Viridian Therapeutics | K3 Business vs. Nationwide Building Society | K3 Business vs. News Corp Cl |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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