Correlation Between ANSYS and OtelloASA

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

By analyzing existing cross correlation between ANSYS Inc and Otello ASA, you can compare the effects of market volatilities on ANSYS and OtelloASA 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 ANSYS with a short position of OtelloASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANSYS and OtelloASA.

Diversification Opportunities for ANSYS and OtelloASA

-0.46

Correlation Coefficient

ANSYS  OtelloASA

Very good diversification

The 3 months correlation between ANSYS and OtelloASA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding ANSYS Inc and Otello ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otello ASA and ANSYS 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 ANSYS Inc are associated (or correlated) with OtelloASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otello ASA has no effect on the direction of ANSYS i.e., ANSYS and OtelloASA go up and down completely randomly.

Pair Corralation between ANSYS and OtelloASA

Assuming the 90 days horizon ANSYS Inc is expected to generate 0.91 times more return on investment than OtelloASA. However, ANSYS Inc is 1.1 times less risky than OtelloASA. It trades about 0.15 of its potential returns per unit of risk. Otello ASA is currently generating about -0.06 per unit of risk. If you would invest  28,730  in ANSYS Inc on September 3, 2024 and sell it today you would earn a total of  4,320  from holding ANSYS Inc or generate 15.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ANSYS Inc  vs.  Otello ASA

ANSYS Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ANSYS Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ANSYS reported solid returns over the last few months and may actually be approaching a breakup point.

Otello ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Otello ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, OtelloASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ANSYS and OtelloASA

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

The idea behind ANSYS Inc and Otello ASA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.