Correlation Between Aspen Technology and PTC

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

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

Diversification Opportunities for Aspen Technology and PTC

0.77

Correlation Coefficient

Aspen Technology  PTC

Poor diversification

The 3 months correlation between Aspen and PTC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Inc 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 PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of Aspen Technology i.e., Aspen Technology and PTC go up and down completely randomly.

Pair Corralation between Aspen Technology and PTC

Given the investment horizon of 90 days Aspen Technology is expected to generate 1.2 times less return on investment than PTC. In addition to that, Aspen Technology is 1.76 times more volatile than PTC Inc. It trades about 0.03 of its total potential returns per unit of risk. PTC Inc is currently generating about 0.06 per unit of volatility. If you would invest  13,379  in PTC Inc on October 3, 2024 and sell it today you would earn a total of  5,008  from holding PTC Inc or generate 37.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Aspen Technology  vs.  PTC Inc

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 recent stock price disarray, may contribute to short-term losses for the investors.

PTC Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PTC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aspen Technology and PTC

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

The idea behind Aspen Technology and PTC Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.