Correlation Between Aberdeen New and Amundi EUR

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

Diversification Opportunities for Aberdeen New and Amundi EUR

0.61

Correlation Coefficient

Aberdeen New  Amundi EUR

Poor diversification

The 3 months correlation between Aberdeen and Amundi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen New India and Amundi EUR High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi EUR High 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 Amundi EUR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi EUR High has no effect on the direction of Aberdeen New i.e., Aberdeen New and Amundi EUR go up and down completely randomly.

Pair Corralation between Aberdeen New and Amundi EUR

Assuming the 90 days trading horizon Aberdeen New India is expected to generate 7.17 times more return on investment than Amundi EUR. However, Aberdeen New is 7.17 times more volatile than Amundi EUR High. It trades about 0.08 of its potential returns per unit of risk. Amundi EUR High is currently generating about 0.2 per unit of risk. If you would invest  78,800  in Aberdeen New India on October 9, 2024 and sell it today you would earn a total of  3,600  from holding Aberdeen New India or generate 4.57% return on investment over 90 days.

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

Aberdeen New India  vs.  Amundi EUR High

Aberdeen New India

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen New India are ranked lower than 6 (%) 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.

Amundi EUR High

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi EUR High are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amundi EUR 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 New and Amundi EUR

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

The idea behind Aberdeen New India and Amundi EUR High 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.