Correlation Between Aberdeen New and Downing Strategic

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

By analyzing existing cross correlation between Aberdeen New India and Downing Strategic Micro Cap, you can compare the effects of market volatilities on Aberdeen New and Downing Strategic 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 New with a short position of Downing Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen New and Downing Strategic.

Diversification Opportunities for Aberdeen New and Downing Strategic

0.02

Correlation Coefficient

Aberdeen New  Downing Strategic

Significant diversification

The 3 months correlation between Aberdeen and Downing is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen New India and Downing Strategic Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Downing Strategic Micro and Aberdeen New 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 New India are associated (or correlated) with Downing Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Downing Strategic Micro has no effect on the direction of Aberdeen New i.e., Aberdeen New and Downing Strategic go up and down completely randomly.

Pair Corralation between Aberdeen New and Downing Strategic

Assuming the 90 days trading horizon Aberdeen New India is expected to generate 0.18 times more return on investment than Downing Strategic. However, Aberdeen New India is 5.48 times less risky than Downing Strategic. It trades about 0.02 of its potential returns per unit of risk. Downing Strategic Micro Cap is currently generating about -0.04 per unit of risk. If you would invest  80,800  in Aberdeen New India on September 13, 2024 and sell it today you would earn a total of  800.00  from holding Aberdeen New India or generate 0.99% return on investment over 90 days.

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

Aberdeen New India  vs.  Downing Strategic Micro Cap

Aberdeen New India

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen New India are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Aberdeen New is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Downing Strategic Micro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Downing Strategic Micro Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Aberdeen New and Downing Strategic

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

The idea behind Aberdeen New India and Downing Strategic Micro Cap 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.