Correlation Between Nasdaq and Aspen Pharmacare

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

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

Diversification Opportunities for Nasdaq and Aspen Pharmacare

-0.38

Correlation Coefficient

Nasdaq  Aspen Pharmacare

Very good diversification

The 3 months correlation between Nasdaq and Aspen is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Aspen Pharmacare go up and down completely randomly.

Pair Corralation between Nasdaq and Aspen Pharmacare

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Aspen Pharmacare. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.55 times less risky than Aspen Pharmacare. The stock trades about -0.01 of its potential returns per unit of risk. The Aspen Pharmacare Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,700,000  in Aspen Pharmacare Holdings on December 26, 2024 and sell it today you would lose (8,400) from holding Aspen Pharmacare Holdings or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Nasdaq Inc  vs.  Aspen Pharmacare Holdings

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Aspen Pharmacare Holdings

Risk-Adjusted Performance

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 rather sound technical and fundamental indicators, Aspen Pharmacare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nasdaq and Aspen Pharmacare

The main advantage of trading using opposite Nasdaq and Aspen Pharmacare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.