Correlation Between Aspen and Pressure Biosciences

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

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

Diversification Opportunities for Aspen and Pressure Biosciences

0.82

Correlation Coefficient

Aspen  Pressure Biosciences

Very poor diversification

The 3 months correlation between Aspen and Pressure is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Group and Pressure Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Biosciences and Aspen 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 Group are associated (or correlated) with Pressure Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Biosciences has no effect on the direction of Aspen i.e., Aspen and Pressure Biosciences go up and down completely randomly.

Pair Corralation between Aspen and Pressure Biosciences

If you would invest  49.00  in Pressure Biosciences on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Pressure Biosciences or generate 0.0% return on investment over 90 days.

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

Aspen Group  vs.  Pressure Biosciences

Aspen Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspen Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aspen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pressure Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pressure Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Pressure Biosciences is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aspen and Pressure Biosciences

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

The idea behind Aspen Group and Pressure Biosciences 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.