Correlation Between Advanced Drainage and Caesarstone

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

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

Diversification Opportunities for Advanced Drainage and Caesarstone

0.12

Correlation Coefficient

Advanced Drainage  Caesarstone

Average diversification

The 3 months correlation between Advanced and Caesarstone is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Drainage Systems and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone and Advanced Drainage 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 Advanced Drainage Systems are associated (or correlated) with Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Advanced Drainage i.e., Advanced Drainage and Caesarstone go up and down completely randomly.

Pair Corralation between Advanced Drainage and Caesarstone

Considering the 90-day investment horizon Advanced Drainage Systems is expected to generate 0.65 times more return on investment than Caesarstone. However, Advanced Drainage Systems is 1.54 times less risky than Caesarstone. It trades about 0.05 of its potential returns per unit of risk. Caesarstone is currently generating about -0.07 per unit of risk. If you would invest  12,227  in Advanced Drainage Systems on May 11, 2025 and sell it today you would earn a total of  914.00  from holding Advanced Drainage Systems or generate 7.48% return on investment over 90 days.

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

Advanced Drainage Systems  vs.  Caesarstone

Advanced Drainage Systems

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Drainage Systems are ranked lower than 4 (%) 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 September 2025.

Caesarstone

Risk-Adjusted Performance

Weakest

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 September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Advanced Drainage and Caesarstone

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

The idea behind Advanced Drainage Systems and Caesarstone 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..