Correlation Between Nasdaq and Asphere Innovations

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

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

Diversification Opportunities for Nasdaq and Asphere Innovations

-0.89

Correlation Coefficient

Nasdaq  Asphere Innovations

Pay attention - limited upside

The 3 months correlation between Nasdaq and Asphere is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Asphere Innovations Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asphere Innovations 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 Asphere Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asphere Innovations has no effect on the direction of Nasdaq i.e., Nasdaq and Asphere Innovations go up and down completely randomly.

Pair Corralation between Nasdaq and Asphere Innovations

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Asphere Innovations. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 3.61 times less risky than Asphere Innovations. The stock trades about -0.17 of its potential returns per unit of risk. The Asphere Innovations Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  414.00  in Asphere Innovations Public on October 7, 2024 and sell it today you would lose (8.00) from holding Asphere Innovations Public or give up 1.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Nasdaq Inc  vs.  Asphere Innovations Public

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Asphere Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asphere Innovations Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nasdaq and Asphere Innovations

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

The idea behind Nasdaq Inc and Asphere Innovations Public 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.