Correlation Between Aeon and Aspen Technology

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

Diversification Opportunities for Aeon and Aspen Technology

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Aeon and Aspen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Co and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology and Aeon 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 Aeon Co are associated (or correlated) with Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Aeon i.e., Aeon and Aspen Technology go up and down completely randomly.

Pair Corralation between Aeon and Aspen Technology

Assuming the 90 days horizon Aeon Co is expected to under-perform the Aspen Technology. But the otc pink sheet apears to be less risky and, when comparing its historical volatility, Aeon Co is 4.53 times less risky than Aspen Technology. The otc pink sheet trades about -0.13 of its potential returns per unit of risk. The Aspen Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  21,568  in Aspen Technology on September 8, 2022 and sell it today you would earn a total of  1,057  from holding Aspen Technology or generate 4.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Aeon Co  vs.  Aspen Technology

 Performance (%) 
       Timeline  
Aeon 
Aeon Performance
0 of 100
Over the last 90 days Aeon Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Aeon is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aeon Price Channel

Aspen Technology 
Aspen Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Aspen Price Channel

Aeon and Aspen Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aeon and Aspen Technology

The main advantage of trading using opposite Aeon and Aspen Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon position performs unexpectedly, Aspen Technology 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 Technology will offset losses from the drop in Aspen Technology's long position.
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The idea behind Aeon Co and Aspen Technology 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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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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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