Correlation Between Abrdn Asia and Global Dividend

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

By analyzing existing cross correlation between abrdn Asia Pacific and Global Dividend Growth, you can compare the effects of market volatilities on Abrdn Asia and Global Dividend 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 Abrdn Asia with a short position of Global Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Asia and Global Dividend.

Diversification Opportunities for Abrdn Asia and Global Dividend

-0.4

Correlation Coefficient

Abrdn Asia  Global Dividend

Very good diversification

The 3 months correlation between Abrdn and Global is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Asia Pacific and Global Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dividend Growth and Abrdn Asia 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 abrdn Asia Pacific are associated (or correlated) with Global Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dividend Growth has no effect on the direction of Abrdn Asia i.e., Abrdn Asia and Global Dividend go up and down completely randomly.

Pair Corralation between Abrdn Asia and Global Dividend

Assuming the 90 days trading horizon abrdn Asia Pacific is expected to generate 0.48 times more return on investment than Global Dividend. However, abrdn Asia Pacific is 2.07 times less risky than Global Dividend. It trades about 0.1 of its potential returns per unit of risk. Global Dividend Growth is currently generating about -0.04 per unit of risk. If you would invest  276.00  in abrdn Asia Pacific on December 21, 2024 and sell it today you would earn a total of  13.00  from holding abrdn Asia Pacific or generate 4.71% return on investment over 90 days.

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

abrdn Asia Pacific  vs.  Global Dividend Growth

abrdn Asia Pacific

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Asia Pacific are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Abrdn Asia is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global Dividend Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Dividend Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Abrdn Asia and Global Dividend

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

The idea behind abrdn Asia Pacific and Global Dividend Growth 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.