Correlation Between Aberdeen Global and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Aberdeen Global 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 Global 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 Global High and Aberdeen China Oppty, you can compare the effects of market volatilities on Aberdeen Global 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 Global with a short position of Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Global and Aberdeen China.
Diversification Opportunities for Aberdeen Global and Aberdeen China
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aberdeen and Aberdeen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global High 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 Global 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 Global High 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 Global i.e., Aberdeen Global and Aberdeen China go up and down completely randomly.
Pair Corralation between Aberdeen Global and Aberdeen China
Assuming the 90 days horizon Aberdeen Global High is expected to generate 0.19 times more return on investment than Aberdeen China. However, Aberdeen Global High is 5.25 times less risky than Aberdeen China. It trades about 0.15 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about -0.03 per unit of risk. If you would invest 583.00 in Aberdeen Global High on August 26, 2024 and sell it today you would earn a total of 118.00 from holding Aberdeen Global High or generate 20.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Global High vs. Aberdeen China Oppty
Performance |
| Timeline |
| Aberdeen Global High |
| Aberdeen China Oppty |
Aberdeen Global and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Global and Aberdeen China
The main advantage of trading using opposite Aberdeen Global and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Global 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 Global vs. Metropolitan West High | Aberdeen Global vs. Westcore Plus Bond | Aberdeen Global vs. Loomis Sayles Bond | Aberdeen Global vs. Equity Series Class |
| Aberdeen China vs. Alpine Dynamic Dividend | Aberdeen China vs. Aberdeen Gbl Eq | Aberdeen China vs. Aberdeen Gbl Eq | Aberdeen China vs. Aberdeen Global Equty |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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