Correlation Between HEMISPHERE EGY and ASPEN TECHINC

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

By analyzing existing cross correlation between HEMISPHERE EGY and ASPEN TECHINC DL, you can compare the effects of market volatilities on HEMISPHERE EGY and ASPEN TECHINC 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 HEMISPHERE EGY with a short position of ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEMISPHERE EGY and ASPEN TECHINC.

Diversification Opportunities for HEMISPHERE EGY and ASPEN TECHINC

0.01

Correlation Coefficient

HEMISPHERE EGY  ASPEN TECHINC

Significant diversification

The 3 months correlation between HEMISPHERE and ASPEN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL and HEMISPHERE EGY 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 HEMISPHERE EGY are associated (or correlated) with ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of HEMISPHERE EGY i.e., HEMISPHERE EGY and ASPEN TECHINC go up and down completely randomly.

Pair Corralation between HEMISPHERE EGY and ASPEN TECHINC

Assuming the 90 days trading horizon HEMISPHERE EGY is expected to generate 0.62 times more return on investment than ASPEN TECHINC. However, HEMISPHERE EGY is 1.63 times less risky than ASPEN TECHINC. It trades about 0.1 of its potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.04 per unit of risk. If you would invest  67.00  in HEMISPHERE EGY on October 10, 2024 and sell it today you would earn a total of  57.00  from holding HEMISPHERE EGY or generate 85.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

HEMISPHERE EGY  vs.  ASPEN TECHINC DL

HEMISPHERE EGY

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days HEMISPHERE EGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEMISPHERE EGY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ASPEN TECHINC DL

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASPEN TECHINC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEMISPHERE EGY and ASPEN TECHINC

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

The idea behind HEMISPHERE EGY and ASPEN TECHINC DL 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.