Correlation Between Aspen Technology and Freight Technologies

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

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

Diversification Opportunities for Aspen Technology and Freight Technologies

-0.65

Correlation Coefficient

Aspen Technology  Freight Technologies

Excellent diversification

The 3 months correlation between Aspen and Freight is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Freight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freight Technologies 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 Freight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freight Technologies has no effect on the direction of Aspen Technology i.e., Aspen Technology and Freight Technologies go up and down completely randomly.

Pair Corralation between Aspen Technology and Freight Technologies

Given the investment horizon of 90 days Aspen Technology is expected to generate 0.09 times more return on investment than Freight Technologies. However, Aspen Technology is 10.73 times less risky than Freight Technologies. It trades about 0.11 of its potential returns per unit of risk. Freight Technologies is currently generating about -0.02 per unit of risk. If you would invest  25,072  in Aspen Technology on December 20, 2024 and sell it today you would earn a total of  1,361  from holding Aspen Technology or generate 5.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.67%
Values	Daily Returns

Aspen Technology  vs.  Freight Technologies

Aspen Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Aspen Technology is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Freight Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Freight Technologies 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 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 Freight Technologies

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

The idea behind Aspen Technology and Freight Technologies 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.