Correlation Between Aberdeen Diversified and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Aberdeen Diversified and CleanTech Lithium 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 Diversified and CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Diversified Income and CleanTech Lithium plc, you can compare the effects of market volatilities on Aberdeen Diversified and CleanTech Lithium 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 Diversified with a short position of CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Diversified and CleanTech Lithium.
Diversification Opportunities for Aberdeen Diversified and CleanTech Lithium
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aberdeen and CleanTech is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Diversified Income and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc and Aberdeen Diversified 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 Diversified Income are associated (or correlated) with CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Aberdeen Diversified i.e., Aberdeen Diversified and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Aberdeen Diversified and CleanTech Lithium
Assuming the 90 days trading horizon Aberdeen Diversified Income is expected to generate 0.38 times more return on investment than CleanTech Lithium. However, Aberdeen Diversified Income is 2.62 times less risky than CleanTech Lithium. It trades about 0.18 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.16 per unit of risk. If you would invest 4,210 in Aberdeen Diversified Income on October 26, 2024 and sell it today you would earn a total of 360.00 from holding Aberdeen Diversified Income or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Diversified Income vs. CleanTech Lithium plc
Performance |
| Timeline |
| Aberdeen Diversified |
| CleanTech Lithium plc |
Aberdeen Diversified and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Diversified and CleanTech Lithium
The main advantage of trading using opposite Aberdeen Diversified and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Diversified position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| Aberdeen Diversified vs. Fair Oaks Income | Aberdeen Diversified vs. Legal General Group | Aberdeen Diversified vs. TMT Investments PLC | Aberdeen Diversified vs. Intermediate Capital Group |
| CleanTech Lithium vs. Diversified Energy | CleanTech Lithium vs. Veolia Environnement VE | CleanTech Lithium vs. Science in Sport | CleanTech Lithium vs. Aberdeen Diversified Income |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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