Correlation Between Aspen Aerogels and Perma Pipe

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

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

Diversification Opportunities for Aspen Aerogels and Perma Pipe

-0.74

Correlation Coefficient

Aspen Aerogels  Perma Pipe

Pay attention - limited upside

The 3 months correlation between Aspen and Perma is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Aerogels and Perma Pipe International Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Pipe Internati and Aspen Aerogels 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 Aerogels are associated (or correlated) with Perma Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Pipe Internati has no effect on the direction of Aspen Aerogels i.e., Aspen Aerogels and Perma Pipe go up and down completely randomly.

Pair Corralation between Aspen Aerogels and Perma Pipe

Given the investment horizon of 90 days Aspen Aerogels is expected to under-perform the Perma Pipe. In addition to that, Aspen Aerogels is 1.23 times more volatile than Perma Pipe International Holdings. It trades about -0.17 of its total potential returns per unit of risk. Perma Pipe International Holdings is currently generating about 0.19 per unit of volatility. If you would invest  1,025  in Perma Pipe International Holdings on August 31, 2024 and sell it today you would earn a total of  524.00  from holding Perma Pipe International Holdings or generate 51.12% return on investment over 90 days.

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

Aspen Aerogels  vs.  Perma Pipe International Holdi

Aspen Aerogels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspen Aerogels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Perma Pipe Internati

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Pipe International Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, Perma Pipe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aspen Aerogels and Perma Pipe

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

The idea behind Aspen Aerogels and Perma Pipe International Holdings 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.