Correlation Between Aspen Technology and Simply Good

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

Diversification Opportunities for Aspen Technology and Simply Good

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Aspen and Simply is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Aspen Technology i.e., Aspen Technology and Simply Good go up and down completely randomly.

Pair Corralation between Aspen Technology and Simply Good

Given the investment horizon of 90 days Aspen Technology is expected to under-perform the Simply Good. In addition to that, Aspen Technology is 1.88 times more volatile than Simply Good Foods. It trades about -0.03 of its total potential returns per unit of risk. Simply Good Foods is currently generating about 0.0 per unit of volatility. If you would invest  3,869  in Simply Good Foods on September 8, 2022 and sell it today you would lose (15.50)  from holding Simply Good Foods or give up 0.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Aspen Technology  vs.  Simply Good Foods

 Performance (%) 
       Timeline  
Aspen Technology 
Aspen Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Aspen Price Channel

Simply Good Foods 
Simply Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Simply Good Foods are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Simply Good revealed solid returns over the last few months and may actually be approaching a breakup point.

Simply Price Channel

Aspen Technology and Simply Good Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aspen Technology and Simply Good

The main advantage of trading using opposite Aspen Technology and Simply Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, Simply Good 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 Simply Good will offset losses from the drop in Simply Good's long position.
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The idea behind Aspen Technology and Simply Good Foods 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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