Correlation Between Aberdeen Japan and Ashmore Group
Can any of the company-specific risk be diversified away by investing in both Aberdeen Japan and Ashmore Group 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 Japan and Ashmore Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Japan Equity and Ashmore Group Plc, you can compare the effects of market volatilities on Aberdeen Japan and Ashmore Group 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 Japan with a short position of Ashmore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Japan and Ashmore Group.
Diversification Opportunities for Aberdeen Japan and Ashmore Group
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aberdeen and Ashmore is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Japan Equity and Ashmore Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Group Plc and Aberdeen Japan 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 Japan Equity are associated (or correlated) with Ashmore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Group Plc has no effect on the direction of Aberdeen Japan i.e., Aberdeen Japan and Ashmore Group go up and down completely randomly.
Pair Corralation between Aberdeen Japan and Ashmore Group
Considering the 90-day investment horizon Aberdeen Japan Equity is expected to generate 0.27 times more return on investment than Ashmore Group. However, Aberdeen Japan Equity is 3.77 times less risky than Ashmore Group. It trades about -0.06 of its potential returns per unit of risk. Ashmore Group Plc is currently generating about -0.03 per unit of risk. If you would invest 611.00 in Aberdeen Japan Equity on November 1, 2024 and sell it today you would lose (31.00) from holding Aberdeen Japan Equity or give up 5.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Japan Equity vs. Ashmore Group Plc
Performance |
| Timeline |
| Aberdeen Japan Equity |
| Ashmore Group Plc |
Aberdeen Japan and Ashmore Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Japan and Ashmore Group
The main advantage of trading using opposite Aberdeen Japan and Ashmore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Japan position performs unexpectedly, Ashmore Group 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 Ashmore Group will offset losses from the drop in Ashmore Group's long position.| Aberdeen Japan vs. Fulcrum Diversified Absolute | Aberdeen Japan vs. The Gabelli Small | Aberdeen Japan vs. Davenport Small Cap | Aberdeen Japan vs. Stone Ridge Diversified |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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