Correlation Between Empire Metals and Abrdn Property

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

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

Diversification Opportunities for Empire Metals and Abrdn Property

-0.13

Correlation Coefficient

Empire Metals  Abrdn Property

Good diversification

The 3 months correlation between Empire and Abrdn is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and abrdn Property Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Property Income and Empire Metals 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 Empire Metals Limited are associated (or correlated) with Abrdn Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Property Income has no effect on the direction of Empire Metals i.e., Empire Metals and Abrdn Property go up and down completely randomly.

Pair Corralation between Empire Metals and Abrdn Property

Assuming the 90 days trading horizon Empire Metals is expected to generate 3.42 times less return on investment than Abrdn Property. In addition to that, Empire Metals is 1.02 times more volatile than abrdn Property Income. It trades about 0.09 of its total potential returns per unit of risk. abrdn Property Income is currently generating about 0.32 per unit of volatility. If you would invest  599.00  in abrdn Property Income on October 8, 2024 and sell it today you would earn a total of  86.00  from holding abrdn Property Income or generate 14.36% return on investment over 90 days.

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

Empire Metals Limited  vs.  abrdn Property Income

Empire Metals Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Empire Metals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Empire Metals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

abrdn Property Income

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Property Income are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Abrdn Property exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empire Metals and Abrdn Property

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

The idea behind Empire Metals Limited and abrdn Property Income 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.