Correlation Between Prudential Health and Abrdn Em

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

By analyzing existing cross correlation between Prudential Health Sciences and Abrdn Em Sma, you can compare the effects of market volatilities on Prudential Health and Abrdn Em 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 Prudential Health with a short position of Abrdn Em. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Health and Abrdn Em.

Diversification Opportunities for Prudential Health and Abrdn Em

0.54

Correlation Coefficient

Prudential Health  Abrdn Em

Very weak diversification

The 3 months correlation between Prudential and Abrdn is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Abrdn Em Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abrdn Em Sma and Prudential Health 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 Prudential Health Sciences are associated (or correlated) with Abrdn Em. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abrdn Em Sma has no effect on the direction of Prudential Health i.e., Prudential Health and Abrdn Em go up and down completely randomly.

Pair Corralation between Prudential Health and Abrdn Em

Assuming the 90 days horizon Prudential Health Sciences is expected to under-perform the Abrdn Em. In addition to that, Prudential Health is 1.18 times more volatile than Abrdn Em Sma. It trades about -0.01 of its total potential returns per unit of risk. Abrdn Em Sma is currently generating about 0.03 per unit of volatility. If you would invest  841.00  in Abrdn Em Sma on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Abrdn Em Sma or generate 1.31% return on investment over 90 days.

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

Prudential Health Sciences  vs.  Abrdn Em Sma

Prudential Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Abrdn Em Sma

Risk-Adjusted Performance

Weak

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

Pair Trading with Prudential Health and Abrdn Em

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

The idea behind Prudential Health Sciences and Abrdn Em Sma 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.