Correlation Between Aspen Technology and Arena Fortify

Can any of the company-specific risk be diversified away by investing in both Aspen Technology and Arena Fortify 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 Arena Fortify into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aspen Technology and Arena Fortify Acquisition, you can compare the effects of market volatilities on Aspen Technology and Arena Fortify 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 Arena Fortify. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Technology and Arena Fortify.

Diversification Opportunities for Aspen Technology and Arena Fortify

0.67

Correlation Coefficient

Aspen Technology  Arena Fortify

Poor diversification

The 3 months correlation between Aspen and Arena is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Arena Fortify Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Fortify Acquisition 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 Arena Fortify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Fortify Acquisition has no effect on the direction of Aspen Technology i.e., Aspen Technology and Arena Fortify go up and down completely randomly.

Pair Corralation between Aspen Technology and Arena Fortify

If you would invest  1,027  in Arena Fortify Acquisition on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Arena Fortify Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Aspen Technology  vs.  Arena Fortify Acquisition

Aspen Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspen Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aspen Technology is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Arena Fortify Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arena Fortify Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Arena Fortify is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aspen Technology and Arena Fortify

The main advantage of trading using opposite Aspen Technology and Arena Fortify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, Arena Fortify 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 Arena Fortify will offset losses from the drop in Arena Fortify's long position.

The idea behind Aspen Technology and Arena Fortify Acquisition 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.