Correlation Between ASPEN TECHINC and Cleanaway Waste

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

Diversification Opportunities for ASPEN TECHINC and Cleanaway Waste

-0.49

Correlation Coefficient

ASPEN TECHINC  Cleanaway Waste

Very good diversification

The 3 months correlation between ASPEN and Cleanaway is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of ASPEN TECHINC i.e., ASPEN TECHINC and Cleanaway Waste go up and down completely randomly.

Pair Corralation between ASPEN TECHINC and Cleanaway Waste

Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 0.61 times more return on investment than Cleanaway Waste. However, ASPEN TECHINC DL is 1.64 times less risky than Cleanaway Waste. It trades about 0.17 of its potential returns per unit of risk. Cleanaway Waste Management is currently generating about -0.06 per unit of risk. If you would invest  20,800  in ASPEN TECHINC DL on October 11, 2024 and sell it today you would earn a total of  3,200  from holding ASPEN TECHINC DL or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

ASPEN TECHINC DL  vs.  Cleanaway Waste Management

ASPEN TECHINC DL

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASPEN TECHINC reported solid returns over the last few months and may actually be approaching a breakup point.

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ASPEN TECHINC and Cleanaway Waste

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

The idea behind ASPEN TECHINC DL and Cleanaway Waste Management 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.