Correlation Between Made Tech and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Made Tech and Ashtead Group 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 Made Tech and Ashtead Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Made Tech Group and Ashtead Group PLC, you can compare the effects of market volatilities on Made Tech and Ashtead Group 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 Made Tech with a short position of Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Made Tech and Ashtead Group.
Diversification Opportunities for Made Tech and Ashtead Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Made and Ashtead is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech Group and Ashtead Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group PLC and Made 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 Made Tech Group are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group PLC has no effect on the direction of Made Tech i.e., Made Tech and Ashtead Group go up and down completely randomly.
Pair Corralation between Made Tech and Ashtead Group
Assuming the 90 days trading horizon Made Tech Group is expected to generate 2.59 times more return on investment than Ashtead Group. However, Made Tech is 2.59 times more volatile than Ashtead Group PLC. It trades about 0.07 of its potential returns per unit of risk. Ashtead Group PLC is currently generating about 0.03 per unit of risk. If you would invest 1,110 in Made Tech Group on September 14, 2024 and sell it today you would earn a total of 1,140 from holding Made Tech Group or generate 102.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Made Tech Group vs. Ashtead Group PLC
Performance |
| Timeline |
| Made Tech Group |
| Ashtead Group PLC |
Made Tech and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Made Tech and Ashtead Group
The main advantage of trading using opposite Made Tech and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Made Tech position performs unexpectedly, Ashtead Group 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 Group will offset losses from the drop in Ashtead Group's long position.| Made Tech vs. Samsung Electronics Co | Made Tech vs. Samsung Electronics Co | Made Tech vs. Hyundai Motor | Made Tech vs. Toyota Motor Corp |
| Ashtead Group vs. Lowland Investment Co | Ashtead Group vs. Addtech | Ashtead Group vs. Made Tech Group | Ashtead Group vs. Intuitive Investments Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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