Correlation Between Aberdeen Global and Aberdeen

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

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

Diversification Opportunities for Aberdeen Global and Aberdeen

0.2

Correlation Coefficient

Aberdeen Global  Aberdeen

Modest diversification

The 3 months correlation between Aberdeen and Aberdeen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global Fixed and Aberdeen Eq Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Eq Long and Aberdeen Global 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 Global Fixed are associated (or correlated) with Aberdeen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Eq Long has no effect on the direction of Aberdeen Global i.e., Aberdeen Global and Aberdeen go up and down completely randomly.

Pair Corralation between Aberdeen Global and Aberdeen

Assuming the 90 days horizon Aberdeen Global is expected to generate 12288.67 times less return on investment than Aberdeen. But when comparing it to its historical volatility, Aberdeen Global Fixed is 113.36 times less risky than Aberdeen. It trades about 0.0 of its potential returns per unit of risk. Aberdeen Eq Long Short is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  963.00  in Aberdeen Eq Long Short on November 29, 2024 and sell it today you would earn a total of  1,991  from holding Aberdeen Eq Long Short or generate 206.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.22%
Values	Daily Returns

Aberdeen Global Fixed  vs.  Aberdeen Eq Long Short

Aberdeen Global Fixed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Global Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Aberdeen Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Eq Long

Risk-Adjusted Performance

OK

Over the last 90 days Aberdeen Eq Long Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak forward indicators, Aberdeen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aberdeen Global and Aberdeen

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

The idea behind Aberdeen Global Fixed and Aberdeen Eq Long Short 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.