Correlation Between Astoria Investments and Aspen Pharmacare

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

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

Diversification Opportunities for Astoria Investments and Aspen Pharmacare

0.63

Correlation Coefficient

Astoria Investments  Aspen Pharmacare

Poor diversification

The 3 months correlation between Astoria and Aspen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Astoria Investments and Aspen Pharmacare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Pharmacare Holdings and Astoria Investments 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 Astoria Investments are associated (or correlated) with Aspen Pharmacare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Pharmacare Holdings has no effect on the direction of Astoria Investments i.e., Astoria Investments and Aspen Pharmacare go up and down completely randomly.

Pair Corralation between Astoria Investments and Aspen Pharmacare

Assuming the 90 days trading horizon Astoria Investments is expected to generate 0.84 times more return on investment than Aspen Pharmacare. However, Astoria Investments is 1.19 times less risky than Aspen Pharmacare. It trades about 0.11 of its potential returns per unit of risk. Aspen Pharmacare Holdings is currently generating about 0.09 per unit of risk. If you would invest  82,500  in Astoria Investments on September 25, 2024 and sell it today you would earn a total of  2,500  from holding Astoria Investments or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Astoria Investments  vs.  Aspen Pharmacare Holdings

Astoria Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astoria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Astoria Investments and Aspen Pharmacare

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

The idea behind Astoria Investments and Aspen Pharmacare 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.