Correlation Between Putnam High and Aberdeen Asia

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

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

Diversification Opportunities for Putnam High and Aberdeen Asia

-0.11

Correlation Coefficient

Putnam High  Aberdeen Asia

Good diversification

The 3 months correlation between Putnam and Aberdeen is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Putnam High Income 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 Putnam High 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 Putnam High Income 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 Putnam High i.e., Putnam High and Aberdeen Asia go up and down completely randomly.

Pair Corralation between Putnam High and Aberdeen Asia

Considering the 90-day investment horizon Putnam High Income is expected to under-perform the Aberdeen Asia. In addition to that, Putnam High is 2.39 times more volatile than Aberdeen Asia Pacificome. It trades about -0.31 of its total potential returns per unit of risk. Aberdeen Asia Pacificome is currently generating about -0.31 per unit of volatility. If you would invest  1,737  in Aberdeen Asia Pacificome on September 24, 2024 and sell it today you would lose (33.00) from holding Aberdeen Asia Pacificome or give up 1.9% of portfolio value over 90 days.

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

Putnam High Income  vs.  Aberdeen Asia Pacificome

Putnam High Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Putnam High and Aberdeen Asia

The main advantage of trading using opposite Putnam High and Aberdeen Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam High 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 Putnam High Income 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.