Correlation Between Aspen Technology and Joint Stock

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

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

Diversification Opportunities for Aspen Technology and Joint Stock

-0.2

Correlation Coefficient

Aspen Technology  Joint Stock

Good diversification

The 3 months correlation between Aspen and Joint is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Aspen Technology i.e., Aspen Technology and Joint Stock go up and down completely randomly.

Pair Corralation between Aspen Technology and Joint Stock

Given the investment horizon of 90 days Aspen Technology is expected to generate 0.34 times more return on investment than Joint Stock. However, Aspen Technology is 2.92 times less risky than Joint Stock. It trades about -0.06 of its potential returns per unit of risk. Joint Stock is currently generating about -0.29 per unit of risk. If you would invest  25,290  in Aspen Technology on October 8, 2024 and sell it today you would lose (196.00) from holding Aspen Technology or give up 0.78% of portfolio value over 90 days.

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

Aspen Technology  vs.  Joint Stock

Aspen Technology

Risk-Adjusted Performance

8 of 100

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.

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Aspen Technology and Joint Stock

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

The idea behind Aspen Technology and Joint Stock 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.