Correlation Between Prosiebensat and Aberdeen Diversified

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

By analyzing existing cross correlation between Prosiebensat 1 Media and Aberdeen Diversified Income, you can compare the effects of market volatilities on Prosiebensat and Aberdeen Diversified 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 Prosiebensat with a short position of Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Aberdeen Diversified.

Diversification Opportunities for Prosiebensat and Aberdeen Diversified

0.22

Correlation Coefficient

Prosiebensat  Aberdeen Diversified

Modest diversification

The 3 months correlation between Prosiebensat and Aberdeen is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified and Prosiebensat 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 Prosiebensat 1 Media are associated (or correlated) with Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of Prosiebensat i.e., Prosiebensat and Aberdeen Diversified go up and down completely randomly.

Pair Corralation between Prosiebensat and Aberdeen Diversified

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to generate 1.29 times more return on investment than Aberdeen Diversified. However, Prosiebensat is 1.29 times more volatile than Aberdeen Diversified Income. It trades about 0.04 of its potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.01 per unit of risk. If you would invest  525.00  in Prosiebensat 1 Media on September 12, 2024 and sell it today you would earn a total of  24.00  from holding Prosiebensat 1 Media or generate 4.57% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  Aberdeen Diversified Income

Prosiebensat 1 Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prosiebensat 1 Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Prosiebensat may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aberdeen Diversified

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Aberdeen Diversified Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aberdeen Diversified is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Prosiebensat and Aberdeen Diversified

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

The idea behind Prosiebensat 1 Media and Aberdeen Diversified Income 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.