Correlation Between Scottish Mortgage and Aberdeen New

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

By analyzing existing cross correlation between Scottish Mortgage Investment and Aberdeen New India, you can compare the effects of market volatilities on Scottish Mortgage and Aberdeen New 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 Scottish Mortgage with a short position of Aberdeen New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish Mortgage and Aberdeen New.

Diversification Opportunities for Scottish Mortgage and Aberdeen New

-0.17

Correlation Coefficient

Scottish Mortgage  Aberdeen New

Good diversification

The 3 months correlation between Scottish and Aberdeen is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and Aberdeen New India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen New India and Scottish Mortgage 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 Scottish Mortgage Investment are associated (or correlated) with Aberdeen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen New India has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and Aberdeen New go up and down completely randomly.

Pair Corralation between Scottish Mortgage and Aberdeen New

Assuming the 90 days trading horizon Scottish Mortgage Investment is expected to generate 1.41 times more return on investment than Aberdeen New. However, Scottish Mortgage is 1.41 times more volatile than Aberdeen New India. It trades about 0.09 of its potential returns per unit of risk. Aberdeen New India is currently generating about 0.13 per unit of risk. If you would invest  64,183  in Scottish Mortgage Investment on September 12, 2024 and sell it today you would earn a total of  32,857  from holding Scottish Mortgage Investment or generate 51.19% return on investment over 90 days.

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

Scottish Mortgage Investment  vs.  Aberdeen New India

Scottish Mortgage

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Scottish Mortgage exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aberdeen New India

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen New India are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Aberdeen New is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Scottish Mortgage and Aberdeen New

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

The idea behind Scottish Mortgage Investment and Aberdeen New India 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.