Correlation Between Central Europe and Aberdeen Asia

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

By analyzing existing cross correlation between Central Europe Russia and Aberdeen Asia Pacific If, you can compare the effects of market volatilities on Central Europe and Aberdeen Asia 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 Central Europe with a short position of Aberdeen Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Europe and Aberdeen Asia.

Diversification Opportunities for Central Europe and Aberdeen Asia

0.9

Correlation Coefficient

Central Europe  Aberdeen Asia

Almost no diversification

The 3 months correlation between Central and Aberdeen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Central Europe Russia and Aberdeen Asia Pacific If in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Asia Pacific and Central Europe 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 Central Europe Russia are associated (or correlated) with Aberdeen Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Asia Pacific has no effect on the direction of Central Europe i.e., Central Europe and Aberdeen Asia go up and down completely randomly.

Pair Corralation between Central Europe and Aberdeen Asia

Considering the 90-day investment horizon Central Europe Russia is expected to generate 5.29 times more return on investment than Aberdeen Asia. However, Central Europe is 5.29 times more volatile than Aberdeen Asia Pacific If. It trades about 0.17 of its potential returns per unit of risk. Aberdeen Asia Pacific If is currently generating about 0.27 per unit of risk. If you would invest  1,127  in Central Europe Russia on December 29, 2024 and sell it today you would earn a total of  353.00  from holding Central Europe Russia or generate 31.32% return on investment over 90 days.

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

Central Europe Russia  vs.  Aberdeen Asia Pacific If

Central Europe Russia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Europe Russia are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather fragile technical and fundamental indicators, Central Europe exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aberdeen Asia Pacific

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Asia Pacific If are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Aberdeen Asia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Central Europe and Aberdeen Asia

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

The idea behind Central Europe Russia and Aberdeen Asia Pacific If 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.

Check out your portfolio center.

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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.