Correlation Between Nemetschek and ASPEN TECHINC

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Can any of the company-specific risk be diversified away by investing in both Nemetschek 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 Nemetschek and ASPEN TECHINC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nemetschek AG ON and ASPEN TECHINC DL, you can compare the effects of market volatilities on Nemetschek 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 Nemetschek with a short position of ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nemetschek and ASPEN TECHINC.

Diversification Opportunities for Nemetschek and ASPEN TECHINC

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nemetschek and ASPEN is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nemetschek AG ON 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 Nemetschek 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 Nemetschek AG ON 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 Nemetschek i.e., Nemetschek and ASPEN TECHINC go up and down completely randomly.

Pair Corralation between Nemetschek and ASPEN TECHINC

Assuming the 90 days trading horizon Nemetschek AG ON is expected to under-perform the ASPEN TECHINC. But the stock apears to be less risky and, when comparing its historical volatility, Nemetschek AG ON is 1.42 times less risky than ASPEN TECHINC. The stock trades about -0.02 of its potential returns per unit of risk. The ASPEN TECHINC DL is currently generating about 0.21 of returns per unit of risk over similar time horizon. 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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nemetschek AG ON  vs.  ASPEN TECHINC DL

 Performance 
       Timeline  
Nemetschek AG ON 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nemetschek AG ON are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Nemetschek may actually be approaching a critical reversion point that can send shares even higher in December 2024.
ASPEN TECHINC DL 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ASPEN TECHINC reported solid returns over the last few months and may actually be approaching a breakup point.

Nemetschek and ASPEN TECHINC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nemetschek and ASPEN TECHINC

The main advantage of trading using opposite Nemetschek and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nemetschek 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.
The idea behind Nemetschek AG ON and ASPEN TECHINC DL 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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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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