Correlation Between Aberdeen Emerging and Aberden Emerng

Can any of the company-specific risk be diversified away by investing in both Aberdeen Emerging and Aberden Emerng 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 Aberden Emerng 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 Aberden Emerng Mrkts, you can compare the effects of market volatilities on Aberdeen Emerging and Aberden Emerng 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 Aberden Emerng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Emerging and Aberden Emerng.

Diversification Opportunities for Aberdeen Emerging and Aberden Emerng

1.0

Correlation Coefficient

Aberdeen Emerging  Aberden Emerng

No risk reduction

The 3 months correlation between Aberdeen and Aberden is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Emerging Markets and Aberden Emerng Mrkts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberden Emerng Mrkts 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 Aberden Emerng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberden Emerng Mrkts has no effect on the direction of Aberdeen Emerging i.e., Aberdeen Emerging and Aberden Emerng go up and down completely randomly.

Pair Corralation between Aberdeen Emerging and Aberden Emerng

Assuming the 90 days horizon Aberdeen Emerging is expected to generate 1.21 times less return on investment than Aberden Emerng. In addition to that, Aberdeen Emerging is 1.0 times more volatile than Aberden Emerng Mrkts. It trades about 0.02 of its total potential returns per unit of risk. Aberden Emerng Mrkts is currently generating about 0.02 per unit of volatility. If you would invest  1,346  in Aberden Emerng Mrkts on December 30, 2024 and sell it today you would earn a total of  13.00  from holding Aberden Emerng Mrkts or generate 0.97% return on investment over 90 days.

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

Aberdeen Emerging Markets  vs.  Aberden Emerng Mrkts

Aberdeen Emerging Markets

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Emerging Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Aberdeen Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberden Emerng Mrkts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberden Emerng Mrkts are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aberden Emerng 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 Aberden Emerng

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

The idea behind Aberdeen Emerging Markets and Aberden Emerng Mrkts 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.