Correlation Between Aspen Technology and Agilysys

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

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

Diversification Opportunities for Aspen Technology and Agilysys

-0.79

Correlation Coefficient

Aspen Technology  Agilysys

Pay attention - limited upside

The 3 months correlation between Aspen and Agilysys is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Agilysys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilysys and Aspen Technology 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 Technology are associated (or correlated) with Agilysys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilysys has no effect on the direction of Aspen Technology i.e., Aspen Technology and Agilysys go up and down completely randomly.

Pair Corralation between Aspen Technology and Agilysys

Given the investment horizon of 90 days Aspen Technology is expected to generate 0.25 times more return on investment than Agilysys. However, Aspen Technology is 3.99 times less risky than Agilysys. It trades about 0.14 of its potential returns per unit of risk. Agilysys is currently generating about -0.23 per unit of risk. If you would invest  24,895  in Aspen Technology on December 29, 2024 and sell it today you would earn a total of  1,538  from holding Aspen Technology or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.97%
Values	Daily Returns

Aspen Technology  vs.  Agilysys

Aspen Technology

Risk-Adjusted Performance

OK

Over the last 90 days Aspen Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Agilysys

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agilysys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aspen Technology and Agilysys

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

The idea behind Aspen Technology and Agilysys 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .