Correlation Between Aberdeen and Aberdeen Global

Can any of the company-specific risk be diversified away by investing in both Aberdeen 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 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 Eq Long Short and Aberdeen Global Unconstrained, you can compare the effects of market volatilities on Aberdeen 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 with a short position of Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen and Aberdeen Global.

Diversification Opportunities for Aberdeen and Aberdeen Global

0.2

Correlation Coefficient

Aberdeen  Aberdeen Global

Modest diversification

The 3 months correlation between Aberdeen and Aberdeen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Eq Long Short and Aberdeen Global Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Unco and Aberdeen 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 Eq Long Short 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 Unco has no effect on the direction of Aberdeen i.e., Aberdeen and Aberdeen Global go up and down completely randomly.

Pair Corralation between Aberdeen and Aberdeen Global

Assuming the 90 days horizon Aberdeen Eq Long Short is expected to generate 114.23 times more return on investment than Aberdeen Global. However, Aberdeen is 114.23 times more volatile than Aberdeen Global Unconstrained. It trades about 0.14 of its potential returns per unit of risk. Aberdeen Global Unconstrained is currently generating about 0.01 per unit of risk. If you would invest  963.00  in Aberdeen Eq Long Short on November 29, 2024 and sell it today you would earn a total of  1,991  from holding Aberdeen Eq Long Short or generate 206.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.67%
Values	Daily Returns

Aberdeen Eq Long Short  vs.  Aberdeen Global Unconstrained

Aberdeen Eq Long

Risk-Adjusted Performance

OK

Over the last 90 days Aberdeen Eq Long Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak forward indicators, Aberdeen showed solid returns over the last few months and may actually be approaching a breakup point.

Aberdeen Global Unco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Global Unconstrained has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 and Aberdeen Global

The main advantage of trading using opposite Aberdeen and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen 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 Eq Long Short and Aberdeen Global Unconstrained 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.