Correlation Between Coloplast and Ashtead Gro
Can any of the company-specific risk be diversified away by investing in both Coloplast and Ashtead Gro 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 Coloplast and Ashtead Gro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloplast A and Ashtead Gro, you can compare the effects of market volatilities on Coloplast and Ashtead Gro 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 Coloplast with a short position of Ashtead Gro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloplast and Ashtead Gro.
Diversification Opportunities for Coloplast and Ashtead Gro
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coloplast and Ashtead is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast A and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro and Coloplast 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 Coloplast A are associated (or correlated) with Ashtead Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Gro has no effect on the direction of Coloplast i.e., Coloplast and Ashtead Gro go up and down completely randomly.
Pair Corralation between Coloplast and Ashtead Gro
Assuming the 90 days horizon Coloplast A is expected to under-perform the Ashtead Gro. But the pink sheet apears to be less risky and, when comparing its historical volatility, Coloplast A is 1.11 times less risky than Ashtead Gro. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Ashtead Gro is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 31,107 in Ashtead Gro on August 29, 2024 and sell it today you would earn a total of 1,476 from holding Ashtead Gro or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloplast A vs. Ashtead Gro
Performance |
| Timeline |
| Coloplast A |
| Ashtead Gro |
Coloplast and Ashtead Gro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloplast and Ashtead Gro
The main advantage of trading using opposite Coloplast and Ashtead Gro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloplast position performs unexpectedly, Ashtead Gro 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 Ashtead Gro will offset losses from the drop in Ashtead Gro's long position.| Coloplast vs. Straumann Holding AG | Coloplast vs. Hoya Corp | Coloplast vs. EssilorLuxottica Socit anonyme | Coloplast vs. Essilor International SA |
| Ashtead Gro vs. United Rentals | Ashtead Gro vs. Ashtead Group plc | Ashtead Gro vs. AerCap Holdings NV | Ashtead Gro vs. Fortress Transp Infra |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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