Correlation Between Brompton Split and Abrdn Asia

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

By analyzing existing cross correlation between Brompton Split Banc and abrdn Asia Pacific, you can compare the effects of market volatilities on Brompton Split and Abrdn 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 Brompton Split with a short position of Abrdn Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton Split and Abrdn Asia.

Diversification Opportunities for Brompton Split and Abrdn Asia

-0.2

Correlation Coefficient

Brompton Split  Abrdn Asia

Good diversification

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

Pair Corralation between Brompton Split and Abrdn Asia

Assuming the 90 days trading horizon Brompton Split is expected to generate 1.96 times less return on investment than Abrdn Asia. In addition to that, Brompton Split is 1.76 times more volatile than abrdn Asia Pacific. It trades about 0.01 of its total potential returns per unit of risk. abrdn Asia Pacific is currently generating about 0.05 per unit of volatility. If you would invest  235.00  in abrdn Asia Pacific on October 11, 2024 and sell it today you would earn a total of  43.00  from holding abrdn Asia Pacific or generate 18.3% return on investment over 90 days.

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

Brompton Split Banc  vs.  abrdn Asia Pacific

Brompton Split Banc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brompton Split Banc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Brompton Split is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

abrdn Asia Pacific

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Asia Pacific are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Abrdn Asia is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brompton Split and Abrdn Asia

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

The idea behind Brompton Split Banc and abrdn Asia Pacific 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.