Correlation Between Aberdeen and Aberdeen Global

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

By analyzing existing cross correlation between Aberdeen Eq Long Short and Aberdeen Global Fixed, you can compare the effects of market volatilities on Aberdeen and Aberdeen Global 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 Aberdeen with a short position of Aberdeen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen and Aberdeen Global.

Diversification Opportunities for Aberdeen and Aberdeen Global

0.36

Correlation Coefficient

Aberdeen  Aberdeen Global

Weak diversification

The 3 months correlation between Aberdeen and Aberdeen is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Eq Long Short and Aberdeen Global Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Global Fixed and Aberdeen 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 Aberdeen Eq Long Short are associated (or correlated) with Aberdeen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Global Fixed has no effect on the direction of Aberdeen i.e., Aberdeen and Aberdeen Global go up and down completely randomly.

Pair Corralation between Aberdeen and Aberdeen Global

Assuming the 90 days horizon Aberdeen Eq Long Short is expected to generate 8.07 times more return on investment than Aberdeen Global. However, Aberdeen is 8.07 times more volatile than Aberdeen Global Fixed. It trades about 0.09 of its potential returns per unit of risk. Aberdeen Global Fixed is currently generating about 0.4 per unit of risk. If you would invest  797.00  in Aberdeen Eq Long Short on July 5, 2024 and sell it today you would earn a total of  58.00  from holding Aberdeen Eq Long Short or generate 7.28% return on investment over 90 days.

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

Aberdeen Eq Long Short  vs.  Aberdeen Global Fixed

Aberdeen Eq Long

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Eq Long Short are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aberdeen may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Aberdeen Global Fixed

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global Fixed are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aberdeen Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aberdeen and Aberdeen Global

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

The idea behind Aberdeen Eq Long Short and Aberdeen Global Fixed 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.