Correlation Between Columbia Greater and Aberdeen China

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

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

Diversification Opportunities for Columbia Greater and Aberdeen China

0.94

Correlation Coefficient

Columbia Greater  Aberdeen China

Almost no diversification

The 3 months correlation between Columbia and Aberdeen is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Greater China and Aberdeen China Oppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen China Oppty and Columbia Greater 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 Columbia Greater China are associated (or correlated) with Aberdeen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen China Oppty has no effect on the direction of Columbia Greater i.e., Columbia Greater and Aberdeen China go up and down completely randomly.

Pair Corralation between Columbia Greater and Aberdeen China

Assuming the 90 days horizon Columbia Greater China is expected to generate 1.45 times more return on investment than Aberdeen China. However, Columbia Greater is 1.45 times more volatile than Aberdeen China Oppty. It trades about 0.14 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about 0.03 per unit of risk. If you would invest  3,377  in Columbia Greater China on December 24, 2024 and sell it today you would earn a total of  465.00  from holding Columbia Greater China or generate 13.77% return on investment over 90 days.

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

Columbia Greater China  vs.  Aberdeen China Oppty

Columbia Greater China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Greater China are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Greater showed solid returns over the last few months and may actually be approaching a breakup point.

Aberdeen China Oppty

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen China Oppty are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aberdeen China is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Greater and Aberdeen China

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

The idea behind Columbia Greater China and Aberdeen China Oppty 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.