Correlation Between ServiceNow and Astra Veda

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

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

Diversification Opportunities for ServiceNow and Astra Veda

-0.79

Correlation Coefficient

ServiceNow  Astra Veda

Pay attention - limited upside

The 3 months correlation between ServiceNow and Astra is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Astra Veda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Veda and ServiceNow 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 ServiceNow are associated (or correlated) with Astra Veda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Veda has no effect on the direction of ServiceNow i.e., ServiceNow and Astra Veda go up and down completely randomly.

Pair Corralation between ServiceNow and Astra Veda

Considering the 90-day investment horizon ServiceNow is expected to under-perform the Astra Veda. But the stock apears to be less risky and, when comparing its historical volatility, ServiceNow is 18.96 times less risky than Astra Veda. The stock trades about -0.13 of its potential returns per unit of risk. The Astra Veda is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Astra Veda on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Astra Veda or generate 0.0% return on investment over 90 days.

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

ServiceNow  vs.  Astra Veda

ServiceNow

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, ServiceNow showed solid returns over the last few months and may actually be approaching a breakup point.

Astra Veda

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astra Veda are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Astra Veda sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ServiceNow and Astra Veda

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

The idea behind ServiceNow and Astra Veda 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.