Correlation Between Black Oak and Aberdeen Gbl

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

By analyzing existing cross correlation between Black Oak Emerging and Aberdeen Gbl Eq, you can compare the effects of market volatilities on Black Oak and Aberdeen Gbl 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 Black Oak with a short position of Aberdeen Gbl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Oak and Aberdeen Gbl.

Diversification Opportunities for Black Oak and Aberdeen Gbl

0.82

Correlation Coefficient

Black Oak  Aberdeen Gbl

Very poor diversification

The 3 months correlation between Black and Aberdeen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging and Aberdeen Gbl Eq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Gbl Eq and Black Oak 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 Black Oak Emerging are associated (or correlated) with Aberdeen Gbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Gbl Eq has no effect on the direction of Black Oak i.e., Black Oak and Aberdeen Gbl go up and down completely randomly.

Pair Corralation between Black Oak and Aberdeen Gbl

Assuming the 90 days horizon Black Oak Emerging is expected to under-perform the Aberdeen Gbl. In addition to that, Black Oak is 1.91 times more volatile than Aberdeen Gbl Eq. It trades about -0.13 of its total potential returns per unit of risk. Aberdeen Gbl Eq is currently generating about -0.14 per unit of volatility. If you would invest  1,226  in Aberdeen Gbl Eq on December 3, 2024 and sell it today you would lose (83.00) from holding Aberdeen Gbl Eq or give up 6.77% of portfolio value over 90 days.

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

Black Oak Emerging  vs.  Aberdeen Gbl Eq

Black Oak Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Black Oak Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Aberdeen Gbl Eq

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Gbl Eq has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Black Oak and Aberdeen Gbl

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

The idea behind Black Oak Emerging and Aberdeen Gbl Eq 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.