Correlation Between RS GROUP and Abrdn Property

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

By analyzing existing cross correlation between RS GROUP PLC and abrdn Property Income, you can compare the effects of market volatilities on RS GROUP and Abrdn Property 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 RS GROUP with a short position of Abrdn Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of RS GROUP and Abrdn Property.

Diversification Opportunities for RS GROUP and Abrdn Property

0.2

Correlation Coefficient

RS GROUP  Abrdn Property

Modest diversification

The 3 months correlation between RS1 and Abrdn is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding RS GROUP PLC and abrdn Property Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Property Income and RS GROUP 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 RS GROUP PLC are associated (or correlated) with Abrdn Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Property Income has no effect on the direction of RS GROUP i.e., RS GROUP and Abrdn Property go up and down completely randomly.

Pair Corralation between RS GROUP and Abrdn Property

Assuming the 90 days trading horizon RS GROUP PLC is expected to under-perform the Abrdn Property. But the stock apears to be less risky and, when comparing its historical volatility, RS GROUP PLC is 1.56 times less risky than Abrdn Property. The stock trades about -0.12 of its potential returns per unit of risk. The abrdn Property Income is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  653.00  in abrdn Property Income on December 20, 2024 and sell it today you would lose (73.00) from holding abrdn Property Income or give up 11.18% of portfolio value over 90 days.

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

RS GROUP PLC  vs.  abrdn Property Income

RS GROUP PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days RS GROUP PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

abrdn Property Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days abrdn Property Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with RS GROUP and Abrdn Property

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

The idea behind RS GROUP PLC and abrdn Property Income 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 Anywhere module to track or share privately all of your investments from the convenience of any device.