Correlation Between Abrdn Emerging and Color Star

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

By analyzing existing cross correlation between Abrdn Emerging Markets and Color Star Technology, you can compare the effects of market volatilities on Abrdn Emerging and Color Star 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 Abrdn Emerging with a short position of Color Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Emerging and Color Star.

Diversification Opportunities for Abrdn Emerging and Color Star

0.74

Correlation Coefficient

Abrdn Emerging  Color Star

Poor diversification

The 3 months correlation between Abrdn and Color is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Abrdn Emerging Markets and Color Star Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Color Star Technology and Abrdn Emerging 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 Abrdn Emerging Markets are associated (or correlated) with Color Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Color Star Technology has no effect on the direction of Abrdn Emerging i.e., Abrdn Emerging and Color Star go up and down completely randomly.

Pair Corralation between Abrdn Emerging and Color Star

Considering the 90-day investment horizon Abrdn Emerging Markets is expected to generate 0.11 times more return on investment than Color Star. However, Abrdn Emerging Markets is 8.83 times less risky than Color Star. It trades about -0.12 of its potential returns per unit of risk. Color Star Technology is currently generating about -0.31 per unit of risk. If you would invest  569.00  in Abrdn Emerging Markets on October 4, 2024 and sell it today you would lose (50.00) from holding Abrdn Emerging Markets or give up 8.79% of portfolio value over 90 days.

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

Abrdn Emerging Markets  vs.  Color Star Technology

Abrdn Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abrdn Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. Despite latest fragile performance, the Fund's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Color Star Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Color Star Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Abrdn Emerging and Color Star

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

The idea behind Abrdn Emerging Markets and Color Star Technology 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.