Correlation Between Bill and Aspen Technology

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

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

Diversification Opportunities for Bill and Aspen Technology

0.91

Correlation Coefficient

Bill  Aspen Technology

Almost no diversification

The 3 months correlation between Bill and Aspen is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology and Bill 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 Bill Com Holdings are associated (or correlated) with Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Bill i.e., Bill and Aspen Technology go up and down completely randomly.

Pair Corralation between Bill and Aspen Technology

Given the investment horizon of 90 days Bill is expected to generate 1.79 times less return on investment than Aspen Technology. In addition to that, Bill is 1.63 times more volatile than Aspen Technology. It trades about 0.01 of its total potential returns per unit of risk. Aspen Technology is currently generating about 0.03 per unit of volatility. If you would invest  20,100  in Aspen Technology on September 17, 2024 and sell it today you would earn a total of  4,780  from holding Aspen Technology or generate 23.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Bill Com Holdings  vs.  Aspen Technology

Bill Com Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aspen Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bill and Aspen Technology

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

The idea behind Bill Com Holdings and Aspen Technology 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.