Correlation Between Abrdn Emerging and GCM Grosvenor

Can any of the company-specific risk be diversified away by investing in both Abrdn Emerging and GCM Grosvenor 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 GCM Grosvenor 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 GCM Grosvenor, you can compare the effects of market volatilities on Abrdn Emerging and GCM Grosvenor 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 GCM Grosvenor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Emerging and GCM Grosvenor.

Diversification Opportunities for Abrdn Emerging and GCM Grosvenor

0.67

Correlation Coefficient

Abrdn Emerging  GCM Grosvenor

Poor diversification

The 3 months correlation between Abrdn and GCM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Abrdn Emerging Markets and GCM Grosvenor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Grosvenor 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 GCM Grosvenor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCM Grosvenor has no effect on the direction of Abrdn Emerging i.e., Abrdn Emerging and GCM Grosvenor go up and down completely randomly.

Pair Corralation between Abrdn Emerging and GCM Grosvenor

Considering the 90-day investment horizon Abrdn Emerging Markets is expected to under-perform the GCM Grosvenor. But the fund apears to be less risky and, when comparing its historical volatility, Abrdn Emerging Markets is 5.53 times less risky than GCM Grosvenor. The fund trades about -0.13 of its potential returns per unit of risk. The GCM Grosvenor is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  202.00  in GCM Grosvenor on December 2, 2024 and sell it today you would earn a total of  56.00  from holding GCM Grosvenor or generate 27.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Abrdn Emerging Markets  vs.  GCM Grosvenor

Abrdn Emerging Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abrdn Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable technical and fundamental indicators, Abrdn Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GCM Grosvenor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abrdn Emerging and GCM Grosvenor

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

The idea behind Abrdn Emerging Markets and GCM Grosvenor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.