Correlation Between Abrdn Property and Power Metal

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

By analyzing existing cross correlation between abrdn Property Income and Power Metal Resources, you can compare the effects of market volatilities on Abrdn Property and Power Metal 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 Property with a short position of Power Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Property and Power Metal.

Diversification Opportunities for Abrdn Property and Power Metal

0.03

Correlation Coefficient

Abrdn Property  Power Metal

Significant diversification

The 3 months correlation between Abrdn and Power is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Property Income and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources and Abrdn Property 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 Property Income are associated (or correlated) with Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Abrdn Property i.e., Abrdn Property and Power Metal go up and down completely randomly.

Pair Corralation between Abrdn Property and Power Metal

Assuming the 90 days trading horizon abrdn Property Income is expected to generate 0.63 times more return on investment than Power Metal. However, abrdn Property Income is 1.58 times less risky than Power Metal. It trades about 0.22 of its potential returns per unit of risk. Power Metal Resources is currently generating about -0.03 per unit of risk. If you would invest  531.00  in abrdn Property Income on October 23, 2024 and sell it today you would earn a total of  159.00  from holding abrdn Property Income or generate 29.94% return on investment over 90 days.

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

abrdn Property Income  vs.  Power Metal Resources

abrdn Property Income

Risk-Adjusted Performance

16 of 100

Solid

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

Power Metal Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Metal Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Abrdn Property and Power Metal

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

The idea behind abrdn Property Income and Power Metal Resources 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.