Correlation Between Aberdeen Australia and Ultra Fund

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

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

Diversification Opportunities for Aberdeen Australia and Ultra Fund

0.88

Correlation Coefficient

Aberdeen Australia  Ultra Fund

Very poor diversification

The 3 months correlation between Aberdeen and Ultra is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Australia Ef and Ultra Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Fund Investor and Aberdeen Australia 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 Australia Ef are associated (or correlated) with Ultra Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Fund Investor has no effect on the direction of Aberdeen Australia i.e., Aberdeen Australia and Ultra Fund go up and down completely randomly.

Pair Corralation between Aberdeen Australia and Ultra Fund

Considering the 90-day investment horizon Aberdeen Australia is expected to generate 1.4 times less return on investment than Ultra Fund. But when comparing it to its historical volatility, Aberdeen Australia Ef is 1.15 times less risky than Ultra Fund. It trades about 0.16 of its potential returns per unit of risk. Ultra Fund Investor is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  8,524  in Ultra Fund Investor on May 5, 2025 and sell it today you would earn a total of  1,036  from holding Ultra Fund Investor or generate 12.15% return on investment over 90 days.

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

Aberdeen Australia Ef  vs.  Ultra Fund Investor

Aberdeen Australia

Risk-Adjusted Performance

Good

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

Ultra Fund Investor

Risk-Adjusted Performance

Good

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

Pair Trading with Aberdeen Australia and Ultra Fund

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

The idea behind Aberdeen Australia Ef and Ultra Fund Investor 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.