Correlation Between Ab Value and Aberdeen Gbl

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

By analyzing existing cross correlation between Ab Value Fund and Aberdeen Gbl Eq, you can compare the effects of market volatilities on Ab Value and Aberdeen Gbl 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 Ab Value with a short position of Aberdeen Gbl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Aberdeen Gbl.

Diversification Opportunities for Ab Value and Aberdeen Gbl

0.33

Correlation Coefficient

Ab Value  Aberdeen Gbl

Weak diversification

The 3 months correlation between ABVCX and Aberdeen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Aberdeen Gbl Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Gbl Eq and Ab Value 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 Ab Value Fund are associated (or correlated) with Aberdeen Gbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Gbl Eq has no effect on the direction of Ab Value i.e., Ab Value and Aberdeen Gbl go up and down completely randomly.

Pair Corralation between Ab Value and Aberdeen Gbl

Assuming the 90 days horizon Ab Value Fund is expected to generate 0.89 times more return on investment than Aberdeen Gbl. However, Ab Value Fund is 1.13 times less risky than Aberdeen Gbl. It trades about 0.0 of its potential returns per unit of risk. Aberdeen Gbl Eq is currently generating about -0.06 per unit of risk. If you would invest  1,724  in Ab Value Fund on December 29, 2024 and sell it today you would lose (2.00) from holding Ab Value Fund or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Ab Value Fund  vs.  Aberdeen Gbl Eq

Ab Value Fund

Risk-Adjusted Performance

Weak

Over the last 90 days Ab Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ab Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Gbl Eq

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Gbl Eq has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Aberdeen Gbl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Value and Aberdeen Gbl

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

The idea behind Ab Value Fund and Aberdeen Gbl Eq 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.