Correlation Between Aspen Technology and ANSYS

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

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

Diversification Opportunities for Aspen Technology and ANSYS

0.79

Correlation Coefficient

Aspen Technology  ANSYS

Poor diversification

The 3 months correlation between Aspen and ANSYS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and ANSYS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANSYS Inc 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 ANSYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANSYS Inc has no effect on the direction of Aspen Technology i.e., Aspen Technology and ANSYS go up and down completely randomly.

Pair Corralation between Aspen Technology and ANSYS

Given the investment horizon of 90 days Aspen Technology is expected to generate 1.25 times less return on investment than ANSYS. But when comparing it to its historical volatility, Aspen Technology is 1.3 times less risky than ANSYS. It trades about 0.09 of its potential returns per unit of risk. ANSYS Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  32,142  in ANSYS Inc on August 30, 2024 and sell it today you would earn a total of  2,660  from holding ANSYS Inc or generate 8.28% return on investment over 90 days.

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

Aspen Technology  vs.  ANSYS Inc

Aspen Technology

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ANSYS Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANSYS Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, ANSYS may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Aspen Technology and ANSYS

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

The idea behind Aspen Technology and ANSYS Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.