Correlation Between Lion Biotechnologies and ASPEN TECHINC
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and ASPEN TECHINC 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 Lion Biotechnologies and ASPEN TECHINC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and ASPEN TECHINC DL, you can compare the effects of market volatilities on Lion Biotechnologies and ASPEN TECHINC 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 Lion Biotechnologies with a short position of ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and ASPEN TECHINC.
Diversification Opportunities for Lion Biotechnologies and ASPEN TECHINC
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and ASPEN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and ASPEN TECHINC go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and ASPEN TECHINC
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the ASPEN TECHINC. In addition to that, Lion Biotechnologies is 2.47 times more volatile than ASPEN TECHINC DL. It trades about -0.19 of its total potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.21 per unit of volatility. If you would invest 21,200 in ASPEN TECHINC DL on August 25, 2024 and sell it today you would earn a total of 2,000 from holding ASPEN TECHINC DL or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. ASPEN TECHINC DL
Performance |
| Timeline |
| Lion Biotechnologies |
| ASPEN TECHINC DL |
Lion Biotechnologies and ASPEN TECHINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and ASPEN TECHINC
The main advantage of trading using opposite Lion Biotechnologies and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, ASPEN TECHINC 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 ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC's long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
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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 the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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