Correlation Between Aspen Pharmacare and Boxer Retail

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

By analyzing existing cross correlation between Aspen Pharmacare Holdings and Boxer Retail, you can compare the effects of market volatilities on Aspen Pharmacare and Boxer Retail 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 Aspen Pharmacare with a short position of Boxer Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Pharmacare and Boxer Retail.

Diversification Opportunities for Aspen Pharmacare and Boxer Retail

0.45

Correlation Coefficient

Aspen Pharmacare  Boxer Retail

Very weak diversification

The 3 months correlation between Aspen and Boxer is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Pharmacare Holdings and Boxer Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boxer Retail and Aspen Pharmacare 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 Aspen Pharmacare Holdings are associated (or correlated) with Boxer Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boxer Retail has no effect on the direction of Aspen Pharmacare i.e., Aspen Pharmacare and Boxer Retail go up and down completely randomly.

Pair Corralation between Aspen Pharmacare and Boxer Retail

Assuming the 90 days trading horizon Aspen Pharmacare is expected to generate 15.14 times less return on investment than Boxer Retail. But when comparing it to its historical volatility, Aspen Pharmacare Holdings is 2.05 times less risky than Boxer Retail. It trades about 0.03 of its potential returns per unit of risk. Boxer Retail is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  540,000  in Boxer Retail on October 12, 2024 and sell it today you would earn a total of  130,000  from holding Boxer Retail or generate 24.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	6.11%
Values	Daily Returns

Aspen Pharmacare Holdings  vs.  Boxer Retail

Aspen Pharmacare Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspen Pharmacare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Boxer Retail

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boxer Retail are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Boxer Retail exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspen Pharmacare and Boxer Retail

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

The idea behind Aspen Pharmacare Holdings and Boxer Retail 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.