Correlation Between Aspen Pharmacare and Benchmark Botanics

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

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

Diversification Opportunities for Aspen Pharmacare and Benchmark Botanics

0.0

Correlation Coefficient

Aspen Pharmacare  Benchmark Botanics

Pay attention - limited upside

The 3 months correlation between Aspen and Benchmark is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Pharmacare Holdings and Benchmark Botanics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Botanics and Aspen Pharmacare 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 Pharmacare Holdings are associated (or correlated) with Benchmark Botanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Botanics has no effect on the direction of Aspen Pharmacare i.e., Aspen Pharmacare and Benchmark Botanics go up and down completely randomly.

Pair Corralation between Aspen Pharmacare and Benchmark Botanics

Assuming the 90 days horizon Aspen Pharmacare is expected to generate 1.19 times less return on investment than Benchmark Botanics. But when comparing it to its historical volatility, Aspen Pharmacare Holdings is 2.14 times less risky than Benchmark Botanics. It trades about 0.07 of its potential returns per unit of risk. Benchmark Botanics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.10  in Benchmark Botanics on September 20, 2024 and sell it today you would lose (0.76) from holding Benchmark Botanics or give up 69.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	78.83%
Values	Daily Returns

Aspen Pharmacare Holdings  vs.  Benchmark Botanics

Aspen Pharmacare Holdings

Risk-Adjusted Performance

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Very Weak

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

Benchmark Botanics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aspen Pharmacare and Benchmark Botanics

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

The idea behind Aspen Pharmacare Holdings and Benchmark Botanics 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.