Correlation Between ASPEN TECHINC and FlatexDEGIRO

Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC and FlatexDEGIRO 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 FlatexDEGIRO 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 flatexDEGIRO AG, you can compare the effects of market volatilities on ASPEN TECHINC and FlatexDEGIRO 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 FlatexDEGIRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and FlatexDEGIRO.

Diversification Opportunities for ASPEN TECHINC and FlatexDEGIRO

0.16

Correlation Coefficient

ASPEN TECHINC  FlatexDEGIRO

Average diversification

The 3 months correlation between ASPEN and FlatexDEGIRO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and flatexDEGIRO AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on flatexDEGIRO AG 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 FlatexDEGIRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of flatexDEGIRO AG has no effect on the direction of ASPEN TECHINC i.e., ASPEN TECHINC and FlatexDEGIRO go up and down completely randomly.

Pair Corralation between ASPEN TECHINC and FlatexDEGIRO

Assuming the 90 days horizon ASPEN TECHINC is expected to generate 1.32 times less return on investment than FlatexDEGIRO. But when comparing it to its historical volatility, ASPEN TECHINC DL is 1.59 times less risky than FlatexDEGIRO. It trades about 0.11 of its potential returns per unit of risk. flatexDEGIRO AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,388  in flatexDEGIRO AG on October 7, 2024 and sell it today you would earn a total of  77.00  from holding flatexDEGIRO AG or generate 5.55% return on investment over 90 days.

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

ASPEN TECHINC DL  vs.  flatexDEGIRO AG

ASPEN TECHINC DL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ASPEN TECHINC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

flatexDEGIRO AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in flatexDEGIRO AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, FlatexDEGIRO may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ASPEN TECHINC and FlatexDEGIRO

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

The idea behind ASPEN TECHINC DL and flatexDEGIRO AG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.