Correlation Between Life Banc and Abrdn Asia

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

By analyzing existing cross correlation between Life Banc Split and abrdn Asia Pacific, you can compare the effects of market volatilities on Life Banc and Abrdn Asia 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 Life Banc with a short position of Abrdn Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Banc and Abrdn Asia.

Diversification Opportunities for Life Banc and Abrdn Asia

0.05

Correlation Coefficient

Life Banc  Abrdn Asia

Significant diversification

The 3 months correlation between Life and Abrdn is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Life Banc Split and abrdn Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Asia Pacific and Life Banc 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 Life Banc Split are associated (or correlated) with Abrdn Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Asia Pacific has no effect on the direction of Life Banc i.e., Life Banc and Abrdn Asia go up and down completely randomly.

Pair Corralation between Life Banc and Abrdn Asia

Assuming the 90 days trading horizon Life Banc Split is expected to generate 2.05 times more return on investment than Abrdn Asia. However, Life Banc is 2.05 times more volatile than abrdn Asia Pacific. It trades about 0.05 of its potential returns per unit of risk. abrdn Asia Pacific is currently generating about 0.05 per unit of risk. If you would invest  655.00  in Life Banc Split on October 11, 2024 and sell it today you would earn a total of  219.00  from holding Life Banc Split or generate 33.44% return on investment over 90 days.

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

Life Banc Split  vs.  abrdn Asia Pacific

Life Banc Split

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Life Banc Split are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Life Banc is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

abrdn Asia Pacific

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Asia Pacific are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Abrdn Asia is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Life Banc and Abrdn Asia

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

The idea behind Life Banc Split and abrdn Asia Pacific 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.