Correlation Between Aspen and Rafarma Pharmaceuticals

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

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

Diversification Opportunities for Aspen and Rafarma Pharmaceuticals

0.0

Correlation Coefficient

Aspen  Rafarma Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Aspen and Rafarma is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Group and Rafarma Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafarma Pharmaceuticals 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 Rafarma Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafarma Pharmaceuticals has no effect on the direction of Aspen i.e., Aspen and Rafarma Pharmaceuticals go up and down completely randomly.

Pair Corralation between Aspen and Rafarma Pharmaceuticals

If you would invest  10.00  in Rafarma Pharmaceuticals on December 5, 2024 and sell it today you would earn a total of  6.00  from holding Rafarma Pharmaceuticals or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aspen Group  vs.  Rafarma Pharmaceuticals

Aspen Group

Risk-Adjusted Performance

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.

Rafarma Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rafarma Pharmaceuticals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical and fundamental indicators, Rafarma Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspen and Rafarma Pharmaceuticals

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

The idea behind Aspen Group and Rafarma Pharmaceuticals 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.