Correlation Between Upright Assets and Aberdeen Japan

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

By analyzing existing cross correlation between Upright Assets Allocation and Aberdeen Japan Equity, you can compare the effects of market volatilities on Upright Assets and Aberdeen Japan 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 Upright Assets with a short position of Aberdeen Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Upright Assets and Aberdeen Japan.

Diversification Opportunities for Upright Assets and Aberdeen Japan

-0.5

Correlation Coefficient

Upright Assets  Aberdeen Japan

Very good diversification

The 3 months correlation between Upright and Aberdeen is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Upright Assets Allocation and Aberdeen Japan Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Japan Equity and Upright Assets 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 Upright Assets Allocation are associated (or correlated) with Aberdeen Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Japan Equity has no effect on the direction of Upright Assets i.e., Upright Assets and Aberdeen Japan go up and down completely randomly.

Pair Corralation between Upright Assets and Aberdeen Japan

Assuming the 90 days horizon Upright Assets Allocation is expected to under-perform the Aberdeen Japan. In addition to that, Upright Assets is 1.96 times more volatile than Aberdeen Japan Equity. It trades about -0.05 of its total potential returns per unit of risk. Aberdeen Japan Equity is currently generating about 0.24 per unit of volatility. If you would invest  559.00  in Aberdeen Japan Equity on December 22, 2024 and sell it today you would earn a total of  115.00  from holding Aberdeen Japan Equity or generate 20.57% return on investment over 90 days.

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

Upright Assets Allocation  vs.  Aberdeen Japan Equity

Upright Assets Allocation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upright Assets Allocation 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.

Aberdeen Japan Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Japan Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak technical and fundamental indicators, Aberdeen Japan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Upright Assets and Aberdeen Japan

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

The idea behind Upright Assets Allocation and Aberdeen Japan Equity 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.