Correlation Between Aspen Technology and Adshares

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Can any of the company-specific risk be diversified away by investing in both Aspen Technology and Adshares 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 Technology and Adshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Technology and Adshares, you can compare the effects of market volatilities on Aspen Technology and Adshares 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 Technology with a short position of Adshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Technology and Adshares.

Diversification Opportunities for Aspen Technology and Adshares

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Aspen and Adshares is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Adshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adshares and Aspen Technology 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 Technology are associated (or correlated) with Adshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adshares has no effect on the direction of Aspen Technology i.e., Aspen Technology and Adshares go up and down completely randomly.

Pair Corralation between Aspen Technology and Adshares

Given the investment horizon of 90 days Aspen Technology is expected to generate 0.93 times more return on investment than Adshares. However, Aspen Technology is 1.08 times less risky than Adshares. It trades about 0.03 of its potential returns per unit of risk. Adshares is currently generating about -0.37 per unit of risk. If you would invest  23,786  in Aspen Technology on September 4, 2022 and sell it today you would earn a total of  213.00  from holding Aspen Technology or generate 0.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Aspen Technology  vs.  Adshares

 Performance (%) 
       Timeline  
Aspen Technology 
Aspen Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Aspen Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aspen Price Channel

Adshares 
Adshares Performance
0 of 100
Over the last 90 days Adshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for Adshares investors.

Adshares Price Channel

Aspen Technology and Adshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aspen Technology and Adshares

The main advantage of trading using opposite Aspen Technology and Adshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, Adshares 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 Adshares will offset losses from the drop in Adshares' long position.
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The idea behind Aspen Technology and Adshares 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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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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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