Correlation Between Aspen Pharmacare and Deneb Investments

Can any of the company-specific risk be diversified away by investing in both Aspen Pharmacare and Deneb Investments 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 Deneb Investments 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 Deneb Investments, you can compare the effects of market volatilities on Aspen Pharmacare and Deneb Investments 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 Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Pharmacare and Deneb Investments.

Diversification Opportunities for Aspen Pharmacare and Deneb Investments

0.25

Correlation Coefficient

Aspen Pharmacare  Deneb Investments

Modest diversification

The 3 months correlation between Aspen and Deneb is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Pharmacare Holdings and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments 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 Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of Aspen Pharmacare i.e., Aspen Pharmacare and Deneb Investments go up and down completely randomly.

Pair Corralation between Aspen Pharmacare and Deneb Investments

Assuming the 90 days trading horizon Aspen Pharmacare is expected to generate 36.86 times less return on investment than Deneb Investments. But when comparing it to its historical volatility, Aspen Pharmacare Holdings is 26.53 times less risky than Deneb Investments. It trades about 0.03 of its potential returns per unit of risk. Deneb Investments is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  23,889  in Deneb Investments on October 23, 2024 and sell it today you would lose (1,989) from holding Deneb Investments or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Aspen Pharmacare Holdings  vs.  Deneb Investments

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 rather sound technical and fundamental indicators, Aspen Pharmacare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Deneb Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deneb Investments 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.

Pair Trading with Aspen Pharmacare and Deneb Investments

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

The idea behind Aspen Pharmacare Holdings and Deneb Investments 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.