Correlation Between Aston Martin and Ampleforth

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

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

Diversification Opportunities for Aston Martin and Ampleforth

-0.4

Correlation Coefficient

Aston Martin  Ampleforth

Very good diversification

The 3 months correlation between Aston and Ampleforth is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aston Martin Lagonda and Ampleforth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampleforth and Aston Martin 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 Aston Martin Lagonda are associated (or correlated) with Ampleforth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampleforth has no effect on the direction of Aston Martin i.e., Aston Martin and Ampleforth go up and down completely randomly.

Pair Corralation between Aston Martin and Ampleforth

Assuming the 90 days horizon Aston Martin Lagonda is expected to under-perform the Ampleforth. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aston Martin Lagonda is 1.46 times less risky than Ampleforth. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Ampleforth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  122.00  in Ampleforth on January 17, 2024 and sell it today you would lose (26.00) from holding Ampleforth or give up 21.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.3%
Values	Daily Returns

Aston Martin Lagonda  vs.  Ampleforth

Aston Martin Lagonda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Ampleforth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ampleforth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aston Martin and Ampleforth

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

The idea behind Aston Martin Lagonda and Ampleforth 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.