Correlation Between Aspen Technology and Momentus

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

Diversification Opportunities for Aspen Technology and Momentus

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aspen and Momentus is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Momentus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentus 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 Momentus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentus has no effect on the direction of Aspen Technology i.e., Aspen Technology and Momentus go up and down completely randomly.

Pair Corralation between Aspen Technology and Momentus

Given the investment horizon of 90 days Aspen Technology is expected to generate 0.53 times more return on investment than Momentus. However, Aspen Technology is 1.87 times less risky than Momentus. It trades about -0.12 of its potential returns per unit of risk. Momentus is currently generating about -0.25 per unit of risk. If you would invest  24,145  in Aspen Technology on September 1, 2022 and sell it today you would lose (1,838)  from holding Aspen Technology or give up 7.61% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Aspen Technology  vs.  Momentus

 Performance (%) 
       Timeline  
Aspen Technology 
Aspen Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Aspen Price Channel

Momentus 
Momentus Performance
0 of 100
Over the last 90 days Momentus has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Momentus Price Channel

Aspen Technology and Momentus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aspen Technology and Momentus

The main advantage of trading using opposite Aspen Technology and Momentus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, Momentus 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 Momentus will offset losses from the drop in Momentus' long position.
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The idea behind Aspen Technology and Momentus 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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