Correlation Between Allianzgi Health and Aberdeen China

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

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

Diversification Opportunities for Allianzgi Health and Aberdeen China

0.29

Correlation Coefficient

Allianzgi Health  Aberdeen China

Modest diversification

The 3 months correlation between Allianzgi and Aberdeen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Health Sciences 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 Allianzgi 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 Allianzgi Health Sciences 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 Allianzgi Health i.e., Allianzgi Health and Aberdeen China go up and down completely randomly.

Pair Corralation between Allianzgi Health and Aberdeen China

Assuming the 90 days horizon Allianzgi Health Sciences is expected to generate 0.77 times more return on investment than Aberdeen China. However, Allianzgi Health Sciences is 1.3 times less risky than Aberdeen China. It trades about -0.12 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about -0.35 per unit of risk. If you would invest  2,887  in Allianzgi Health Sciences on October 11, 2024 and sell it today you would lose (57.00) from holding Allianzgi Health Sciences or give up 1.97% of portfolio value over 90 days.

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

Allianzgi Health Sciences  vs.  Aberdeen China Oppty

Allianzgi Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aberdeen China Oppty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen China Oppty 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 Allianzgi Health and Aberdeen China

The main advantage of trading using opposite Allianzgi Health and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianzgi Health 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 Allianzgi Health Sciences 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.