Correlation Between Japan Smaller and Aberdeen Global

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

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

Diversification Opportunities for Japan Smaller and Aberdeen Global

-0.35

Correlation Coefficient

Japan Smaller  Aberdeen Global

Very good diversification

The 3 months correlation between Japan and Aberdeen is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Japan Smaller Capitalization and Aberdeen Global Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Premier and Japan Smaller 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 Japan Smaller Capitalization 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 Premier has no effect on the direction of Japan Smaller i.e., Japan Smaller and Aberdeen Global go up and down completely randomly.

Pair Corralation between Japan Smaller and Aberdeen Global

Considering the 90-day investment horizon Japan Smaller Capitalization is expected to generate 0.56 times more return on investment than Aberdeen Global. However, Japan Smaller Capitalization is 1.79 times less risky than Aberdeen Global. It trades about -0.02 of its potential returns per unit of risk. Aberdeen Global Premier is currently generating about -0.24 per unit of risk. If you would invest  764.00  in Japan Smaller Capitalization on October 11, 2024 and sell it today you would lose (3.00) from holding Japan Smaller Capitalization or give up 0.39% of portfolio value over 90 days.

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

Japan Smaller Capitalization  vs.  Aberdeen Global Premier

Japan Smaller Capita

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Smaller Capitalization has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Japan Smaller is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aberdeen Global Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Global Premier has generated negative risk-adjusted returns adding no value to fund investors. Even with latest unsteady performance, the Fund's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.

Pair Trading with Japan Smaller and Aberdeen Global

The main advantage of trading using opposite Japan Smaller and Aberdeen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Smaller 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 Japan Smaller Capitalization and Aberdeen Global Premier 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.