Correlation Between Aspen Pharmacare and RMB Holdings

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

Diversification Opportunities for Aspen Pharmacare and RMB Holdings

-0.57

Correlation Coefficient

Aspen Pharmacare  RMB Holdings

Excellent diversification

The 3 months correlation between Aspen and RMB is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Pharmacare Holdings and RMB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMB Holdings 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 RMB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMB Holdings has no effect on the direction of Aspen Pharmacare i.e., Aspen Pharmacare and RMB Holdings go up and down completely randomly.

Pair Corralation between Aspen Pharmacare and RMB Holdings

Assuming the 90 days trading horizon Aspen Pharmacare Holdings is expected to generate 1.11 times more return on investment than RMB Holdings. However, Aspen Pharmacare is 1.11 times more volatile than RMB Holdings. It trades about 0.01 of its potential returns per unit of risk. RMB Holdings is currently generating about -0.11 per unit of risk. If you would invest  1,742,000  in Aspen Pharmacare Holdings on December 22, 2024 and sell it today you would earn a total of  5,200  from holding Aspen Pharmacare Holdings or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aspen Pharmacare Holdings  vs.  RMB Holdings

Aspen Pharmacare Holdings

Risk-Adjusted Performance

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.

RMB Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days RMB Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aspen Pharmacare and RMB Holdings

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

The idea behind Aspen Pharmacare Holdings and RMB Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.