Correlation Between Central Asia and Aberdeen Diversified
Can any of the company-specific risk be diversified away by investing in both Central Asia and Aberdeen Diversified 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 Central Asia and Aberdeen Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and Aberdeen Diversified Income, you can compare the effects of market volatilities on Central Asia and Aberdeen Diversified 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 Central Asia with a short position of Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Aberdeen Diversified.
Diversification Opportunities for Central Asia and Aberdeen Diversified
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Central and Aberdeen is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified and Central Asia 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 Central Asia Metals are associated (or correlated) with Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of Central Asia i.e., Central Asia and Aberdeen Diversified go up and down completely randomly.
Pair Corralation between Central Asia and Aberdeen Diversified
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Aberdeen Diversified. In addition to that, Central Asia is 1.01 times more volatile than Aberdeen Diversified Income. It trades about -0.1 of its total potential returns per unit of risk. Aberdeen Diversified Income is currently generating about 0.01 per unit of volatility. If you would invest 4,203 in Aberdeen Diversified Income on August 31, 2024 and sell it today you would earn a total of 37.00 from holding Aberdeen Diversified Income or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Asia Metals vs. Aberdeen Diversified Income
Performance |
| Timeline |
| Central Asia Metals |
| Aberdeen Diversified |
Central Asia and Aberdeen Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Aberdeen Diversified
The main advantage of trading using opposite Central Asia and Aberdeen Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Aberdeen Diversified 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 Diversified will offset losses from the drop in Aberdeen Diversified's long position.The idea behind Central Asia Metals and Aberdeen Diversified Income 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.| Aberdeen Diversified vs. United States Steel | Aberdeen Diversified vs. Iron Mountain | Aberdeen Diversified vs. Dentsply Sirona | Aberdeen Diversified vs. EVS Broadcast Equipment |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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