Correlation Between Absolute Convertible and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Aberdeen China 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 Absolute Convertible and Aberdeen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Aberdeen China Oppty, you can compare the effects of market volatilities on Absolute Convertible and Aberdeen China 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 Absolute Convertible with a short position of Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Aberdeen China.
Diversification Opportunities for Absolute Convertible and Aberdeen China
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Absolute and Aberdeen is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Aberdeen China Oppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen China Oppty and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Aberdeen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen China Oppty has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Aberdeen China go up and down completely randomly.
Pair Corralation between Absolute Convertible and Aberdeen China
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.11 times more return on investment than Aberdeen China. However, Absolute Convertible Arbitrage is 9.02 times less risky than Aberdeen China. It trades about 0.0 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about -0.04 per unit of risk. If you would invest 1,123 in Absolute Convertible Arbitrage on October 24, 2024 and sell it today you would earn a total of 0.00 from holding Absolute Convertible Arbitrage or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Aberdeen China Oppty
Performance |
| Timeline |
| Absolute Convertible |
| Aberdeen China Oppty |
Absolute Convertible and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Aberdeen China
The main advantage of trading using opposite Absolute Convertible and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Aberdeen China 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 China will offset losses from the drop in Aberdeen China's long position.| Absolute Convertible vs. Science Technology Fund | Absolute Convertible vs. Vanguard Information Technology | Absolute Convertible vs. Hennessy Technology Fund | Absolute Convertible vs. Red Oak Technology |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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