Correlation Between Aspen Technology and Lookers Plc
Can any of the company-specific risk be diversified away by investing in both Aspen Technology and Lookers Plc 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 Lookers Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Technology and Lookers Plc, you can compare the effects of market volatilities on Aspen Technology and Lookers Plc 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 Lookers Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Technology and Lookers Plc.
Diversification Opportunities for Aspen Technology and Lookers Plc
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aspen and Lookers is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Lookers Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lookers Plc 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 Lookers Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lookers Plc has no effect on the direction of Aspen Technology i.e., Aspen Technology and Lookers Plc go up and down completely randomly.
Pair Corralation between Aspen Technology and Lookers Plc
If you would invest 21,054 in Aspen Technology on September 3, 2024 and sell it today you would earn a total of 3,780 from holding Aspen Technology or generate 17.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 0.8% |
Values | Daily Returns |
Aspen Technology vs. Lookers Plc
Performance |
Timeline |
Aspen Technology |
Lookers Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aspen Technology and Lookers Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aspen Technology and Lookers Plc
The main advantage of trading using opposite Aspen Technology and Lookers Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, Lookers Plc 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 Lookers Plc will offset losses from the drop in Lookers Plc's long position.Aspen Technology vs. Bentley Systems | Aspen Technology vs. Tyler Technologies | Aspen Technology vs. Blackbaud | Aspen Technology vs. SSC Technologies Holdings |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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