Correlation Between Aspen Technology and Biotricity
Can any of the company-specific risk be diversified away by investing in both Aspen Technology and Biotricity 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 Biotricity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Technology and Biotricity, you can compare the effects of market volatilities on Aspen Technology and Biotricity 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 Biotricity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Technology and Biotricity.
Diversification Opportunities for Aspen Technology and Biotricity
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aspen and Biotricity is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Biotricity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotricity 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 Biotricity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotricity has no effect on the direction of Aspen Technology i.e., Aspen Technology and Biotricity go up and down completely randomly.
Pair Corralation between Aspen Technology and Biotricity
Given the investment horizon of 90 days Aspen Technology is expected to generate 0.27 times more return on investment than Biotricity. However, Aspen Technology is 3.77 times less risky than Biotricity. It trades about -0.02 of its potential returns per unit of risk. Biotricity is currently generating about -0.1 per unit of risk. If you would invest 19,980 in Aspen Technology on January 19, 2024 and sell it today you would lose (232.00) from holding Aspen Technology or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Technology vs. Biotricity
Performance |
| Timeline |
| Aspen Technology |
| Biotricity |
Aspen Technology and Biotricity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Technology and Biotricity
The main advantage of trading using opposite Aspen Technology and Biotricity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, Biotricity 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 Biotricity will offset losses from the drop in Biotricity's long position.| Aspen Technology vs. Bentley SystemsInc | Aspen Technology vs. Tyler Technologies | Aspen Technology vs. Blackbaud | Aspen Technology vs. SSC Technologies Holdings |
| Biotricity vs. Agilent Technologies | Biotricity vs. Illumina | Biotricity vs. IDEXX Laboratories | Biotricity vs. Waters |
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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