Correlation Between ASPEN TECHINC and Hisense Home

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

Diversification Opportunities for ASPEN TECHINC and Hisense Home

-0.61

Correlation Coefficient

ASPEN TECHINC  Hisense Home

Excellent diversification

The 3 months correlation between ASPEN and Hisense is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances 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 Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of ASPEN TECHINC i.e., ASPEN TECHINC and Hisense Home go up and down completely randomly.

Pair Corralation between ASPEN TECHINC and Hisense Home

Assuming the 90 days horizon ASPEN TECHINC is expected to generate 12.37 times less return on investment than Hisense Home. But when comparing it to its historical volatility, ASPEN TECHINC DL is 3.7 times less risky than Hisense Home. It trades about 0.13 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  264.00  in Hisense Home Appliances on October 10, 2024 and sell it today you would earn a total of  61.00  from holding Hisense Home Appliances or generate 23.11% return on investment over 90 days.

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

ASPEN TECHINC DL  vs.  Hisense Home Appliances

ASPEN TECHINC DL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 10 (%) 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.

Hisense Home Appliances

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hisense Home Appliances has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hisense Home is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ASPEN TECHINC and Hisense Home

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

The idea behind ASPEN TECHINC DL and Hisense Home Appliances 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.