Correlation Between Aberdeen Diversified and Hansa Investment

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

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

Diversification Opportunities for Aberdeen Diversified and Hansa Investment

-0.23

Correlation Coefficient

Aberdeen Diversified  Hansa Investment

Very good diversification

The 3 months correlation between Aberdeen and Hansa is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Diversified Income and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment and Aberdeen Diversified 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 Diversified Income are associated (or correlated) with Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Aberdeen Diversified i.e., Aberdeen Diversified and Hansa Investment go up and down completely randomly.

Pair Corralation between Aberdeen Diversified and Hansa Investment

Assuming the 90 days trading horizon Aberdeen Diversified Income is expected to generate 0.8 times more return on investment than Hansa Investment. However, Aberdeen Diversified Income is 1.25 times less risky than Hansa Investment. It trades about 0.16 of its potential returns per unit of risk. Hansa Investment is currently generating about -0.05 per unit of risk. If you would invest  4,310  in Aberdeen Diversified Income on December 29, 2024 and sell it today you would earn a total of  580.00  from holding Aberdeen Diversified Income or generate 13.46% return on investment over 90 days.

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

Aberdeen Diversified Income  vs.  Hansa Investment

Aberdeen Diversified

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Diversified Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aberdeen Diversified unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hansa Investment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aberdeen Diversified and Hansa Investment

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

The idea behind Aberdeen Diversified Income and Hansa Investment 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.