Correlation Between BOC Aviation and Ashtead Gro

Can any of the company-specific risk be diversified away by investing in both BOC Aviation 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 BOC Aviation and Ashtead Gro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BOC Aviation Limited and Ashtead Gro, you can compare the effects of market volatilities on BOC Aviation 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 BOC Aviation with a short position of Ashtead Gro. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOC Aviation and Ashtead Gro.

Diversification Opportunities for BOC Aviation and Ashtead Gro

-0.81

Correlation Coefficient

BOC Aviation  Ashtead Gro

Pay attention - limited upside

The 3 months correlation between BOC and Ashtead is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding BOC Aviation Limited and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro and BOC Aviation 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 BOC Aviation Limited 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 BOC Aviation i.e., BOC Aviation and Ashtead Gro go up and down completely randomly.

Pair Corralation between BOC Aviation and Ashtead Gro

Assuming the 90 days horizon BOC Aviation Limited is expected to under-perform the Ashtead Gro. In addition to that, BOC Aviation is 1.47 times more volatile than Ashtead Gro. It trades about -0.1 of its total potential returns per unit of risk. Ashtead Gro is currently generating about 0.14 per unit of volatility. If you would invest  28,258  in Ashtead Gro on September 2, 2024 and sell it today you would earn a total of  4,386  from holding Ashtead Gro or generate 15.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

BOC Aviation Limited  vs.  Ashtead Gro

BOC Aviation Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOC Aviation Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ashtead Gro

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtead Gro are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Ashtead Gro showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOC Aviation and Ashtead Gro

The main advantage of trading using opposite BOC Aviation and Ashtead Gro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOC Aviation 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.

The idea behind BOC Aviation Limited and Ashtead Gro pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.