Correlation Between Aberdeen Small and Paradigm Micro

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

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

Diversification Opportunities for Aberdeen Small and Paradigm Micro

0.9

Correlation Coefficient

Aberdeen Small  Paradigm Micro

Almost no diversification

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

Pair Corralation between Aberdeen Small and Paradigm Micro

Assuming the 90 days horizon Aberdeen Small is expected to generate 1.09 times less return on investment than Paradigm Micro. But when comparing it to its historical volatility, Aberdeen Small Cap is 1.71 times less risky than Paradigm Micro. It trades about 0.17 of its potential returns per unit of risk. Paradigm Micro Cap Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,438  in Paradigm Micro Cap Fund on May 1, 2025 and sell it today you would earn a total of  498.00  from holding Paradigm Micro Cap Fund or generate 11.22% return on investment over 90 days.

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

Aberdeen Small Cap  vs.  Paradigm Micro Cap Fund

Aberdeen Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aberdeen Small may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Paradigm Micro Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paradigm Micro Cap Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Paradigm Micro may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Aberdeen Small and Paradigm Micro

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

The idea behind Aberdeen Small Cap and Paradigm Micro Cap Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.