Correlation Between Deneb Investments and Aspen Pharmacare

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

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

Diversification Opportunities for Deneb Investments and Aspen Pharmacare

0.09

Correlation Coefficient

Deneb Investments  Aspen Pharmacare

Significant diversification

The 3 months correlation between Deneb and Aspen is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Deneb Investments and Aspen Pharmacare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Pharmacare Holdings and Deneb Investments 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 Deneb Investments are associated (or correlated) with Aspen Pharmacare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Pharmacare Holdings has no effect on the direction of Deneb Investments i.e., Deneb Investments and Aspen Pharmacare go up and down completely randomly.

Pair Corralation between Deneb Investments and Aspen Pharmacare

Assuming the 90 days trading horizon Deneb Investments is expected to under-perform the Aspen Pharmacare. But the stock apears to be less risky and, when comparing its historical volatility, Deneb Investments is 1.19 times less risky than Aspen Pharmacare. The stock trades about -0.24 of its potential returns per unit of risk. The Aspen Pharmacare Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,690,000  in Aspen Pharmacare Holdings on October 8, 2024 and sell it today you would earn a total of  43,300  from holding Aspen Pharmacare Holdings or generate 2.56% return on investment over 90 days.

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

Deneb Investments  vs.  Aspen Pharmacare Holdings

Deneb Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deneb Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aspen Pharmacare Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspen Pharmacare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Deneb Investments and Aspen Pharmacare

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

The idea behind Deneb Investments and Aspen Pharmacare Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.