Correlation Between Astonherndon Large and Basic Materials

Can any of the company-specific risk be diversified away by investing in both Astonherndon Large and Basic Materials 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 Astonherndon Large and Basic Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astonherndon Large Cap and Basic Materials Ultrasector, you can compare the effects of market volatilities on Astonherndon Large and Basic Materials 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 Astonherndon Large with a short position of Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astonherndon Large and Basic Materials.

Diversification Opportunities for Astonherndon Large and Basic Materials

0.63

Correlation Coefficient

Astonherndon Large  Basic Materials

Poor diversification

The 3 months correlation between Astonherndon and Basic is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Astonherndon Large Cap and Basic Materials Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Materials Ultr and Astonherndon Large 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 Astonherndon Large Cap are associated (or correlated) with Basic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Materials Ultr has no effect on the direction of Astonherndon Large i.e., Astonherndon Large and Basic Materials go up and down completely randomly.

Pair Corralation between Astonherndon Large and Basic Materials

Assuming the 90 days horizon Astonherndon Large Cap is expected to generate 0.44 times more return on investment than Basic Materials. However, Astonherndon Large Cap is 2.27 times less risky than Basic Materials. It trades about 0.06 of its potential returns per unit of risk. Basic Materials Ultrasector is currently generating about 0.02 per unit of risk. If you would invest  1,016  in Astonherndon Large Cap on April 30, 2025 and sell it today you would earn a total of  237.00  from holding Astonherndon Large Cap or generate 23.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Astonherndon Large Cap  vs.  Basic Materials Ultrasector

Astonherndon Large Cap

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Astonherndon Large Cap are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Astonherndon Large showed solid returns over the last few months and may actually be approaching a breakup point.

Basic Materials Ultr

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Basic Materials Ultrasector are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Basic Materials may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Astonherndon Large and Basic Materials

The main advantage of trading using opposite Astonherndon Large and Basic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astonherndon Large position performs unexpectedly, Basic Materials 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 Basic Materials will offset losses from the drop in Basic Materials' long position.

The idea behind Astonherndon Large Cap and Basic Materials Ultrasector 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.

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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.