Correlation Between Aspen Technology and COCOS BCX

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

Diversification Opportunities for Aspen Technology and COCOS BCX

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Aspen and COCOS is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and COCOS BCX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCOS BCX 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 COCOS BCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCOS BCX has no effect on the direction of Aspen Technology i.e., Aspen Technology and COCOS BCX go up and down completely randomly.

Pair Corralation between Aspen Technology and COCOS BCX

Given the investment horizon of 90 days Aspen Technology is expected to generate 745.79 times less return on investment than COCOS BCX. But when comparing it to its historical volatility, Aspen Technology is 164.72 times less risky than COCOS BCX. It trades about 0.09 of its potential returns per unit of risk. COCOS BCX is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  0.06  in COCOS BCX on September 3, 2022 and sell it today you would earn a total of  50.94  from holding COCOS BCX or generate 80724.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy96.9%
ValuesDaily Returns

Aspen Technology  vs.  COCOS BCX

 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 unsteady basic indicators, Aspen Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aspen Price Channel

COCOS BCX 
COCOS Performance
25 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in COCOS BCX are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COCOS BCX sustained solid returns over the last few months and may actually be approaching a breakup point.

COCOS Price Channel

Aspen Technology and COCOS BCX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aspen Technology and COCOS BCX

The main advantage of trading using opposite Aspen Technology and COCOS BCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, COCOS BCX 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 COCOS BCX will offset losses from the drop in COCOS BCX's long position.
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The idea behind Aspen Technology and COCOS BCX 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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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