Correlation Between Aberdeen Emerging and Aberdeen Global

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

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

Diversification Opportunities for Aberdeen Emerging and Aberdeen Global

0.02

Correlation Coefficient

Aberdeen Emerging  Aberdeen Global

Significant diversification

The 3 months correlation between Aberdeen and Aberdeen is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Emerging Markets and Aberdeen Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global High and Aberdeen Emerging 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 Emerging Markets are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global High has no effect on the direction of Aberdeen Emerging i.e., Aberdeen Emerging and Aberdeen Global go up and down completely randomly.

Pair Corralation between Aberdeen Emerging and Aberdeen Global

Assuming the 90 days horizon Aberdeen Emerging Markets is expected to under-perform the Aberdeen Global. In addition to that, Aberdeen Emerging is 3.82 times more volatile than Aberdeen Global High. It trades about -0.23 of its total potential returns per unit of risk. Aberdeen Global High is currently generating about -0.31 per unit of volatility. If you would invest  780.00  in Aberdeen Global High on October 4, 2024 and sell it today you would lose (9.00) from holding Aberdeen Global High or give up 1.15% of portfolio value over 90 days.

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

Aberdeen Emerging Markets  vs.  Aberdeen Global High

Aberdeen Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Aberdeen Global High

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aberdeen Emerging and Aberdeen Global

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

The idea behind Aberdeen Emerging Markets and Aberdeen Global High 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.