Correlation Between Aberden Emerng and Aberdeen Gbl

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

By analyzing existing cross correlation between Aberden Emerng Mrkts and Aberdeen Gbl Small, you can compare the effects of market volatilities on Aberden Emerng and Aberdeen Gbl 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 Aberden Emerng with a short position of Aberdeen Gbl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberden Emerng and Aberdeen Gbl.

Diversification Opportunities for Aberden Emerng and Aberdeen Gbl

0.9

Correlation Coefficient

Aberden Emerng  Aberdeen Gbl

Almost no diversification

The 3 months correlation between Aberden and Aberdeen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Aberden Emerng Mrkts and Aberdeen Gbl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Gbl Small and Aberden Emerng 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 Aberden Emerng Mrkts are associated (or correlated) with Aberdeen Gbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Gbl Small has no effect on the direction of Aberden Emerng i.e., Aberden Emerng and Aberdeen Gbl go up and down completely randomly.

Pair Corralation between Aberden Emerng and Aberdeen Gbl

Assuming the 90 days horizon Aberden Emerng Mrkts is expected to generate 1.35 times more return on investment than Aberdeen Gbl. However, Aberden Emerng is 1.35 times more volatile than Aberdeen Gbl Small. It trades about 0.16 of its potential returns per unit of risk. Aberdeen Gbl Small is currently generating about 0.2 per unit of risk. If you would invest  1,395  in Aberden Emerng Mrkts on May 5, 2025 and sell it today you would earn a total of  108.00  from holding Aberden Emerng Mrkts or generate 7.74% return on investment over 90 days.

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

Aberden Emerng Mrkts  vs.  Aberdeen Gbl Small

Aberden Emerng Mrkts

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberden Emerng Mrkts are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aberden Emerng may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Aberdeen Gbl Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Gbl Small are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Aberdeen Gbl may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Aberden Emerng and Aberdeen Gbl

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

The idea behind Aberden Emerng Mrkts and Aberdeen Gbl Small 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.