Correlation Between Caesarstone and Advanced Drainage

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

By analyzing existing cross correlation between Caesarstone and Advanced Drainage Systems, you can compare the effects of market volatilities on Caesarstone and Advanced Drainage 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 Caesarstone with a short position of Advanced Drainage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caesarstone and Advanced Drainage.

Diversification Opportunities for Caesarstone and Advanced Drainage

-0.1

Correlation Coefficient

Caesarstone  Advanced Drainage

Good diversification

The 3 months correlation between Caesarstone and Advanced is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Caesarstone and Advanced Drainage Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Drainage Systems and Caesarstone 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 Caesarstone are associated (or correlated) with Advanced Drainage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Drainage Systems has no effect on the direction of Caesarstone i.e., Caesarstone and Advanced Drainage go up and down completely randomly.

Pair Corralation between Caesarstone and Advanced Drainage

Given the investment horizon of 90 days Caesarstone is expected to under-perform the Advanced Drainage. In addition to that, Caesarstone is 2.18 times more volatile than Advanced Drainage Systems. It trades about -0.07 of its total potential returns per unit of risk. Advanced Drainage Systems is currently generating about 0.09 per unit of volatility. If you would invest  11,486  in Advanced Drainage Systems on April 30, 2025 and sell it today you would earn a total of  405.00  from holding Advanced Drainage Systems or generate 3.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Caesarstone  vs.  Advanced Drainage Systems

Caesarstone

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caesarstone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Advanced Drainage Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Drainage Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Advanced Drainage may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Caesarstone and Advanced Drainage

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

The idea behind Caesarstone and Advanced Drainage Systems 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.