Correlation Between High Tech and Ashley Services
Can any of the company-specific risk be diversified away by investing in both High Tech and Ashley Services 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 High Tech and Ashley Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Tech Metals and Ashley Services Group, you can compare the effects of market volatilities on High Tech and Ashley Services 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 High Tech with a short position of Ashley Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Tech and Ashley Services.
Diversification Opportunities for High Tech and Ashley Services
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between High and Ashley is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding High Tech Metals and Ashley Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashley Services Group and High Tech 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 High Tech Metals are associated (or correlated) with Ashley Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashley Services Group has no effect on the direction of High Tech i.e., High Tech and Ashley Services go up and down completely randomly.
Pair Corralation between High Tech and Ashley Services
Assuming the 90 days trading horizon High Tech Metals is expected to under-perform the Ashley Services. But the stock apears to be less risky and, when comparing its historical volatility, High Tech Metals is 2.42 times less risky than Ashley Services. The stock trades about -0.22 of its potential returns per unit of risk. The Ashley Services Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Ashley Services Group on November 4, 2024 and sell it today you would earn a total of 1.00 from holding Ashley Services Group or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
High Tech Metals vs. Ashley Services Group
Performance |
| Timeline |
| High Tech Metals |
| Ashley Services Group |
High Tech and Ashley Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Tech and Ashley Services
The main advantage of trading using opposite High Tech and Ashley Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Tech position performs unexpectedly, Ashley Services 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 Ashley Services will offset losses from the drop in Ashley Services' long position.| High Tech vs. BSP Financial Group | High Tech vs. Pure Foods Tasmania | High Tech vs. Finexia Financial Group | High Tech vs. National Australia Bank |
| Ashley Services vs. Diversified United Investment | Ashley Services vs. Queste Communications | Ashley Services vs. Hudson Investment Group | Ashley Services vs. Dexus Convenience Retail |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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