Correlation Between Aberdeen Income and Ashmore Group

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

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

Diversification Opportunities for Aberdeen Income and Ashmore Group

-0.19

Correlation Coefficient

Aberdeen Income  Ashmore Group

Good diversification

The 3 months correlation between Aberdeen and Ashmore is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Ashmore Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Group Plc and Aberdeen Income 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 Aberdeen Income Credit are associated (or correlated) with Ashmore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Group Plc has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Ashmore Group go up and down completely randomly.

Pair Corralation between Aberdeen Income and Ashmore Group

Considering the 90-day investment horizon Aberdeen Income Credit is expected to generate 0.71 times more return on investment than Ashmore Group. However, Aberdeen Income Credit is 1.41 times less risky than Ashmore Group. It trades about -0.02 of its potential returns per unit of risk. Ashmore Group Plc is currently generating about -0.18 per unit of risk. If you would invest  626.00  in Aberdeen Income Credit on November 19, 2024 and sell it today you would lose (7.00) from holding Aberdeen Income Credit or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

Aberdeen Income Credit  vs.  Ashmore Group Plc

Aberdeen Income Credit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Income Credit has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable fundamental indicators, Aberdeen Income is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ashmore Group Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashmore Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aberdeen Income and Ashmore Group

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

The idea behind Aberdeen Income Credit and Ashmore Group Plc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.