Correlation Between Aberdeen Emerging and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Aberdeen Emerging 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 Aberdeen Emerging and Aberdeen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Emerging Markets and Aberdeen China Oppty, you can compare the effects of market volatilities on Aberdeen Emerging 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 Aberdeen Emerging with a short position of Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Emerging and Aberdeen China.
Diversification Opportunities for Aberdeen Emerging and Aberdeen China
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aberdeen and Aberdeen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Emerging Markets 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 Aberdeen Emerging 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 Emerging Markets 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 Aberdeen Emerging i.e., Aberdeen Emerging and Aberdeen China go up and down completely randomly.
Pair Corralation between Aberdeen Emerging and Aberdeen China
Assuming the 90 days horizon Aberdeen Emerging is expected to generate 2.91 times less return on investment than Aberdeen China. But when comparing it to its historical volatility, Aberdeen Emerging Markets is 1.17 times less risky than Aberdeen China. It trades about 0.06 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,139 in Aberdeen China Oppty on November 3, 2024 and sell it today you would earn a total of 65.00 from holding Aberdeen China Oppty or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aberdeen Emerging Markets vs. Aberdeen China Oppty
Performance |
| Timeline |
| Aberdeen Emerging Markets |
| Aberdeen China Oppty |
Aberdeen Emerging and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Emerging and Aberdeen China
The main advantage of trading using opposite Aberdeen Emerging and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Emerging 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.| Aberdeen Emerging vs. Ab Bond Inflation | Aberdeen Emerging vs. Touchstone Ultra Short | Aberdeen Emerging vs. Siit High Yield | Aberdeen Emerging vs. Rbc Bluebay Emerging |
| Aberdeen China vs. Intal High Relative | Aberdeen China vs. Tfa Alphagen Growth | Aberdeen China vs. Gmo Quality Fund | Aberdeen China vs. Qs Large Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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