Correlation Between Global Advantage and Aberdeen Asia

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

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

Diversification Opportunities for Global Advantage and Aberdeen Asia

-0.87

Correlation Coefficient

Global Advantage  Aberdeen Asia

Pay attention - limited upside

The 3 months correlation between Global and Aberdeen is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Global Advantage Portfolio and Aberdeen Asia Pacificome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Asia Pacificome and Global Advantage 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 Advantage Portfolio are associated (or correlated) with Aberdeen Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Asia Pacificome has no effect on the direction of Global Advantage i.e., Global Advantage and Aberdeen Asia go up and down completely randomly.

Pair Corralation between Global Advantage and Aberdeen Asia

Assuming the 90 days horizon Global Advantage Portfolio is expected to generate 6.59 times more return on investment than Aberdeen Asia. However, Global Advantage is 6.59 times more volatile than Aberdeen Asia Pacificome. It trades about -0.02 of its potential returns per unit of risk. Aberdeen Asia Pacificome is currently generating about -0.31 per unit of risk. If you would invest  1,481  in Global Advantage Portfolio on September 24, 2024 and sell it today you would lose (15.00) from holding Global Advantage Portfolio or give up 1.01% of portfolio value over 90 days.

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

Global Advantage Portfolio  vs.  Aberdeen Asia Pacificome

Global Advantage Por

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Advantage Portfolio are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Advantage showed solid returns over the last few months and may actually be approaching a breakup point.

Aberdeen Asia Pacificome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Asia Pacificome has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Global Advantage and Aberdeen Asia

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

The idea behind Global Advantage Portfolio and Aberdeen Asia Pacificome 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.