Correlation Between ASPEN TECHINC and GLG LIFE

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

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

Diversification Opportunities for ASPEN TECHINC and GLG LIFE

0.0

Correlation Coefficient

ASPEN TECHINC  GLG LIFE

Pay attention - limited upside

The 3 months correlation between ASPEN and GLG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and GLG LIFE TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLG LIFE TECH and ASPEN TECHINC 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 ASPEN TECHINC DL are associated (or correlated) with GLG LIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLG LIFE TECH has no effect on the direction of ASPEN TECHINC i.e., ASPEN TECHINC and GLG LIFE go up and down completely randomly.

Pair Corralation between ASPEN TECHINC and GLG LIFE

If you would invest  21,400  in ASPEN TECHINC DL on October 25, 2024 and sell it today you would earn a total of  2,800  from holding ASPEN TECHINC DL or generate 13.08% return on investment over 90 days.

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

ASPEN TECHINC DL  vs.  GLG LIFE TECH

ASPEN TECHINC DL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ASPEN TECHINC reported solid returns over the last few months and may actually be approaching a breakup point.

GLG LIFE TECH

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ASPEN TECHINC and GLG LIFE

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

The idea behind ASPEN TECHINC DL and GLG LIFE TECH 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.