Correlation Between Aberdeen China and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both Aberdeen China and Aberdeen Emerging 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 China and Aberdeen Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen China Oppty and Aberdeen Emerging Markets, you can compare the effects of market volatilities on Aberdeen China and Aberdeen Emerging 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 China with a short position of Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen China and Aberdeen Emerging.
Diversification Opportunities for Aberdeen China and Aberdeen Emerging
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aberdeen and Aberdeen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen China Oppty and Aberdeen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markets and Aberdeen China 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 China Oppty are associated (or correlated) with Aberdeen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markets has no effect on the direction of Aberdeen China i.e., Aberdeen China and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between Aberdeen China and Aberdeen Emerging
Assuming the 90 days horizon Aberdeen China Oppty is expected to under-perform the Aberdeen Emerging. In addition to that, Aberdeen China is 2.11 times more volatile than Aberdeen Emerging Markets. It trades about -0.15 of its total potential returns per unit of risk. Aberdeen Emerging Markets is currently generating about -0.19 per unit of volatility. If you would invest 1,409 in Aberdeen Emerging Markets on August 26, 2024 and sell it today you would lose (53.00) from holding Aberdeen Emerging Markets or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen China Oppty vs. Aberdeen Emerging Markets
Performance |
| Timeline |
| Aberdeen China Oppty |
| Aberdeen Emerging Markets |
Aberdeen China and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen China and Aberdeen Emerging
The main advantage of trading using opposite Aberdeen China and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen China position performs unexpectedly, Aberdeen Emerging 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 Emerging will offset losses from the drop in Aberdeen Emerging's long position.| Aberdeen China vs. Valic Company I | Aberdeen China vs. Amg River Road | Aberdeen China vs. Vanguard Small Cap Value | Aberdeen China vs. Pace Smallmedium Value |
| Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Emerging Markets | Aberdeen Emerging vs. Aberdeen Gbl Eq | Aberdeen Emerging vs. Aberdeen Gbl Eq |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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