Correlation Between Aspen Pharmacare and British Amer
Can any of the company-specific risk be diversified away by investing in both Aspen Pharmacare and British Amer 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 Pharmacare and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Pharmacare Holdings and British American Tobacco, you can compare the effects of market volatilities on Aspen Pharmacare and British Amer 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 Pharmacare with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Pharmacare and British Amer.
Diversification Opportunities for Aspen Pharmacare and British Amer
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aspen and British is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Pharmacare Holdings and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Aspen Pharmacare 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 Pharmacare Holdings are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Aspen Pharmacare i.e., Aspen Pharmacare and British Amer go up and down completely randomly.
Pair Corralation between Aspen Pharmacare and British Amer
Assuming the 90 days trading horizon Aspen Pharmacare Holdings is expected to under-perform the British Amer. But the stock apears to be less risky and, when comparing its historical volatility, Aspen Pharmacare Holdings is 1.38 times less risky than British Amer. The stock trades about -0.44 of its potential returns per unit of risk. The British American Tobacco is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 6,100,400 in British American Tobacco on September 1, 2024 and sell it today you would earn a total of 730,600 from holding British American Tobacco or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aspen Pharmacare Holdings vs. British American Tobacco
Performance |
| Timeline |
| Aspen Pharmacare Holdings |
| British American Tobacco |
Aspen Pharmacare and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Pharmacare and British Amer
The main advantage of trading using opposite Aspen Pharmacare and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Pharmacare position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| Aspen Pharmacare vs. Blue Label Telecoms | Aspen Pharmacare vs. Bytes Technology | Aspen Pharmacare vs. Astoria Investments | Aspen Pharmacare vs. Frontier Transport Holdings |
| British Amer vs. Standard Bank Group | British Amer vs. Deneb Investments | British Amer vs. Ascendis Health | British Amer vs. Frontier Transport Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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