Correlation Between Downing Strategic and Aberdeen New

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

By analyzing existing cross correlation between Downing Strategic Micro Cap and Aberdeen New India, you can compare the effects of market volatilities on Downing Strategic and Aberdeen New 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 Downing Strategic with a short position of Aberdeen New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Downing Strategic and Aberdeen New.

Diversification Opportunities for Downing Strategic and Aberdeen New

0.19

Correlation Coefficient

Downing Strategic  Aberdeen New

Average diversification

The 3 months correlation between Downing and Aberdeen is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Downing Strategic Micro Cap and Aberdeen New India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen New India and Downing Strategic 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 Downing Strategic Micro Cap are associated (or correlated) with Aberdeen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen New India has no effect on the direction of Downing Strategic i.e., Downing Strategic and Aberdeen New go up and down completely randomly.

Pair Corralation between Downing Strategic and Aberdeen New

Assuming the 90 days trading horizon Downing Strategic Micro Cap is expected to generate 4.31 times more return on investment than Aberdeen New. However, Downing Strategic is 4.31 times more volatile than Aberdeen New India. It trades about 0.02 of its potential returns per unit of risk. Aberdeen New India is currently generating about 0.01 per unit of risk. If you would invest  477.00  in Downing Strategic Micro Cap on September 5, 2024 and sell it today you would lose (7.00) from holding Downing Strategic Micro Cap or give up 1.47% of portfolio value over 90 days.

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

Downing Strategic Micro Cap  vs.  Aberdeen New India

Downing Strategic Micro

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Downing Strategic Micro Cap are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Downing Strategic is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aberdeen New India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen New India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aberdeen New is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Downing Strategic and Aberdeen New

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

The idea behind Downing Strategic Micro Cap and Aberdeen New India 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.