Correlation Between Aberdeen China and International Investors
Can any of the company-specific risk be diversified away by investing in both Aberdeen China and International Investors 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 International Investors 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 International Investors Gold, you can compare the effects of market volatilities on Aberdeen China and International Investors 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 International Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen China and International Investors.
Diversification Opportunities for Aberdeen China and International Investors
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aberdeen and International is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen China Oppty and International Investors Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Investors 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 International Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Investors has no effect on the direction of Aberdeen China i.e., Aberdeen China and International Investors go up and down completely randomly.
Pair Corralation between Aberdeen China and International Investors
Assuming the 90 days horizon Aberdeen China Oppty is expected to generate 0.97 times more return on investment than International Investors. However, Aberdeen China Oppty is 1.03 times less risky than International Investors. It trades about -0.09 of its potential returns per unit of risk. International Investors Gold is currently generating about -0.25 per unit of risk. If you would invest 2,306 in Aberdeen China Oppty on August 30, 2024 and sell it today you would lose (91.00) from holding Aberdeen China Oppty or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen China Oppty vs. International Investors Gold
Performance |
| Timeline |
| Aberdeen China Oppty |
| International Investors |
Aberdeen China and International Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen China and International Investors
The main advantage of trading using opposite Aberdeen China and International Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen China position performs unexpectedly, International Investors 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 International Investors will offset losses from the drop in International Investors' long position.| Aberdeen China vs. Artisan Small Cap | Aberdeen China vs. Champlain Mid Cap | Aberdeen China vs. Small Midcap Dividend Income | Aberdeen China vs. Growth Fund Of |
| International Investors vs. Goldman Sachs Clean | International Investors vs. Gabelli Gold Fund | International Investors vs. Goldman Sachs Centrated | International Investors vs. Precious Metals And |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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