Correlation Between Global Technology and Aberdeen Global

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

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

Diversification Opportunities for Global Technology and Aberdeen Global

-0.6

Correlation Coefficient

Global Technology  Aberdeen Global

Excellent diversification

The 3 months correlation between Global and Aberdeen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio 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 Global Technology 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 Global Technology Portfolio 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 Global Technology i.e., Global Technology and Aberdeen Global go up and down completely randomly.

Pair Corralation between Global Technology and Aberdeen Global

Assuming the 90 days horizon Global Technology Portfolio is expected to generate 5.38 times more return on investment than Aberdeen Global. However, Global Technology is 5.38 times more volatile than Aberdeen Global Unconstrained. It trades about 0.15 of its potential returns per unit of risk. Aberdeen Global Unconstrained is currently generating about 0.03 per unit of risk. If you would invest  1,926  in Global Technology Portfolio on September 2, 2024 and sell it today you would earn a total of  213.00  from holding Global Technology Portfolio or generate 11.06% return on investment over 90 days.

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

Global Technology Portfolio  vs.  Aberdeen Global Unconstrained

Global Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Technology Portfolio are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aberdeen Global Unco

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global Unconstrained are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Global Technology and Aberdeen Global

The main advantage of trading using opposite Global Technology and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology 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 Global Technology Portfolio 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.