Correlation Between Aberdeen Asia-pacific and Pimco New

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Can any of the company-specific risk be diversified away by investing in both Aberdeen Asia-pacific and Pimco New 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 Asia-pacific and Pimco New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Asia Pacific If and Pimco New York, you can compare the effects of market volatilities on Aberdeen Asia-pacific and Pimco New 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 Asia-pacific with a short position of Pimco New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Asia-pacific and Pimco New.

Diversification Opportunities for Aberdeen Asia-pacific and Pimco New

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aberdeen and Pimco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Asia Pacific If and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York and Aberdeen Asia-pacific 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 Asia Pacific If are associated (or correlated) with Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of Aberdeen Asia-pacific i.e., Aberdeen Asia-pacific and Pimco New go up and down completely randomly.

Pair Corralation between Aberdeen Asia-pacific and Pimco New

Considering the 90-day investment horizon Aberdeen Asia Pacific If is expected to generate 1.39 times more return on investment than Pimco New. However, Aberdeen Asia-pacific is 1.39 times more volatile than Pimco New York. It trades about 0.03 of its potential returns per unit of risk. Pimco New York is currently generating about 0.02 per unit of risk. If you would invest  1,460  in Aberdeen Asia Pacific If on August 31, 2024 and sell it today you would earn a total of  116.00  from holding Aberdeen Asia Pacific If or generate 7.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.73%
ValuesDaily Returns

Aberdeen Asia Pacific If  vs.  Pimco New York

 Performance 
       Timeline  
Aberdeen Asia Pacific 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Aberdeen Asia Pacific If has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aberdeen Asia-pacific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Pimco New York 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Pimco New is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Aberdeen Asia-pacific and Pimco New Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aberdeen Asia-pacific and Pimco New

The main advantage of trading using opposite Aberdeen Asia-pacific and Pimco New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Asia-pacific position performs unexpectedly, Pimco New 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 Pimco New will offset losses from the drop in Pimco New's long position.
The idea behind Aberdeen Asia Pacific If and Pimco New York 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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