Correlation Between Hennessy Gas and Aberdeen Standard

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

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

Diversification Opportunities for Hennessy Gas and Aberdeen Standard

0.69

Correlation Coefficient

Hennessy Gas  Aberdeen Standard

Poor diversification

The 3 months correlation between Hennessy and Aberdeen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Gas Utility and Aberdeen Standard Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Standard Global and Hennessy Gas 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 Hennessy Gas Utility are associated (or correlated) with Aberdeen Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Standard Global has no effect on the direction of Hennessy Gas i.e., Hennessy Gas and Aberdeen Standard go up and down completely randomly.

Pair Corralation between Hennessy Gas and Aberdeen Standard

If you would invest  1,719  in Aberdeen Standard Global on December 2, 2024 and sell it today you would earn a total of  80.00  from holding Aberdeen Standard Global or generate 4.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Hennessy Gas Utility  vs.  Aberdeen Standard Global

Hennessy Gas Utility

Risk-Adjusted Performance

Very Weak

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

Aberdeen Standard Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Standard Global has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong technical and fundamental indicators, Aberdeen Standard is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hennessy Gas and Aberdeen Standard

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

The idea behind Hennessy Gas Utility and Aberdeen Standard Global 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.