Correlation Between TMT Investments and Aberdeen Diversified

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

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

Diversification Opportunities for TMT Investments and Aberdeen Diversified

-0.59

Correlation Coefficient

TMT Investments  Aberdeen Diversified

Excellent diversification

The 3 months correlation between TMT and Aberdeen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding TMT Investments PLC and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified and TMT Investments 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 TMT Investments PLC are associated (or correlated) with Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of TMT Investments i.e., TMT Investments and Aberdeen Diversified go up and down completely randomly.

Pair Corralation between TMT Investments and Aberdeen Diversified

Assuming the 90 days trading horizon TMT Investments PLC is expected to under-perform the Aberdeen Diversified. In addition to that, TMT Investments is 1.11 times more volatile than Aberdeen Diversified Income. It trades about -0.1 of its total potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.1 per unit of volatility. If you would invest  4,370  in Aberdeen Diversified Income on December 4, 2024 and sell it today you would earn a total of  330.00  from holding Aberdeen Diversified Income or generate 7.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

TMT Investments PLC  vs.  Aberdeen Diversified Income

TMT Investments PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days TMT Investments PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Aberdeen Diversified

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Diversified Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Aberdeen Diversified may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TMT Investments and Aberdeen Diversified

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

The idea behind TMT Investments PLC and Aberdeen Diversified 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.