Correlation Between Aspen Technology and Social Life
Can any of the company-specific risk be diversified away by investing in both Aspen Technology and Social Life 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 Social Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Technology and Social Life Network, you can compare the effects of market volatilities on Aspen Technology and Social Life 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 Social Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Technology and Social Life.
Diversification Opportunities for Aspen Technology and Social Life
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aspen and Social is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Social Life Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Life Network 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 Social Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Life Network has no effect on the direction of Aspen Technology i.e., Aspen Technology and Social Life go up and down completely randomly.
Pair Corralation between Aspen Technology and Social Life
Given the investment horizon of 90 days Aspen Technology is expected to generate 11.54 times less return on investment than Social Life. But when comparing it to its historical volatility, Aspen Technology is 23.31 times less risky than Social Life. It trades about 0.2 of its potential returns per unit of risk. Social Life Network is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.04 in Social Life Network on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Social Life Network or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aspen Technology vs. Social Life Network
Performance |
| Timeline |
| Aspen Technology |
| Social Life Network |
Aspen Technology and Social Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Technology and Social Life
The main advantage of trading using opposite Aspen Technology and Social Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, Social Life 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 Social Life will offset losses from the drop in Social Life's long position.| Aspen Technology vs. Bentley Systems | Aspen Technology vs. Tyler Technologies | Aspen Technology vs. Blackbaud | Aspen Technology vs. SSC Technologies Holdings |
| Social Life vs. Infobird Co | Social Life vs. Astra Veda | Social Life vs. Fernhill Corp | Social Life vs. Protek Capital |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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