Correlation Between PULSION Medical and Ashtead Group

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

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

Diversification Opportunities for PULSION Medical and Ashtead Group

0.79

Correlation Coefficient

PULSION Medical  Ashtead Group

Poor diversification

The 3 months correlation between PULSION and Ashtead is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PULSION Medical Systems and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc and PULSION Medical 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 PULSION Medical Systems are associated (or correlated) with Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of PULSION Medical i.e., PULSION Medical and Ashtead Group go up and down completely randomly.

Pair Corralation between PULSION Medical and Ashtead Group

Assuming the 90 days trading horizon PULSION Medical Systems is expected to generate 1.91 times more return on investment than Ashtead Group. However, PULSION Medical is 1.91 times more volatile than Ashtead Group plc. It trades about 0.11 of its potential returns per unit of risk. Ashtead Group plc is currently generating about 0.15 per unit of risk. If you would invest  1,559  in PULSION Medical Systems on April 24, 2025 and sell it today you would earn a total of  431.00  from holding PULSION Medical Systems or generate 27.65% return on investment over 90 days.

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

PULSION Medical Systems  vs.  Ashtead Group plc

PULSION Medical Systems

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PULSION Medical Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PULSION Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ashtead Group plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashtead Group plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ashtead Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PULSION Medical and Ashtead Group

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

The idea behind PULSION Medical Systems and Ashtead Group plc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.