Correlation Between Innovativ Media and Aspen Technology

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

By analyzing existing cross correlation between Innovativ Media Group and Aspen Technology, you can compare the effects of market volatilities on Innovativ Media 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 Innovativ Media with a short position of Aspen Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovativ Media and Aspen Technology.

Diversification Opportunities for Innovativ Media and Aspen Technology

-0.26

Correlation Coefficient

Innovativ Media  Aspen Technology

Very good diversification

The 3 months correlation between Innovativ and Aspen is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Innovativ Media Group and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology and Innovativ Media 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 Innovativ Media Group 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 Innovativ Media i.e., Innovativ Media and Aspen Technology go up and down completely randomly.

Pair Corralation between Innovativ Media and Aspen Technology

If you would invest  16,498  in Aspen Technology on March 2, 2024 and sell it today you would earn a total of  4,414  from holding Aspen Technology or generate 26.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

Innovativ Media Group  vs.  Aspen Technology

Innovativ Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aspen Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Innovativ Media and Aspen Technology

The main advantage of trading using opposite Innovativ Media and Aspen Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovativ Media 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.

The idea behind Innovativ Media Group 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.