Correlation Between ASPEN TECHINC and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC and Lion Biotechnologies 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 TECHINC and Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN TECHINC DL and Lion Biotechnologies, you can compare the effects of market volatilities on ASPEN TECHINC and Lion Biotechnologies 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 TECHINC with a short position of Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and Lion Biotechnologies.
Diversification Opportunities for ASPEN TECHINC and Lion Biotechnologies
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASPEN and Lion is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies and ASPEN TECHINC 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 TECHINC DL are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of ASPEN TECHINC i.e., ASPEN TECHINC and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and Lion Biotechnologies
Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 0.4 times more return on investment than Lion Biotechnologies. However, ASPEN TECHINC DL is 2.47 times less risky than Lion Biotechnologies. It trades about 0.21 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.19 per unit of risk. 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 |
ASPEN TECHINC DL vs. Lion Biotechnologies
Performance |
| Timeline |
| ASPEN TECHINC DL |
| Lion Biotechnologies |
ASPEN TECHINC and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN TECHINC and Lion Biotechnologies
The main advantage of trading using opposite ASPEN TECHINC and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC position performs unexpectedly, Lion Biotechnologies 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 Lion Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.| ASPEN TECHINC vs. Salesforce | ASPEN TECHINC vs. Nemetschek AG ON | ASPEN TECHINC vs. PagerDuty | ASPEN TECHINC vs. Superior Plus Corp |
| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
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 Stocks Directory module to find actively traded stocks across global markets.
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