Correlation Between The Gold and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both The Gold 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 The Gold and Aberdeen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gold Bullion and Aberdeen China Oppty, you can compare the effects of market volatilities on The Gold 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 The Gold with a short position of Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gold and Aberdeen China.
Diversification Opportunities for The Gold and Aberdeen China
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between The and Aberdeen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion 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 The Gold 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 The Gold Bullion 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 The Gold i.e., The Gold and Aberdeen China go up and down completely randomly.
Pair Corralation between The Gold and Aberdeen China
Assuming the 90 days horizon The Gold Bullion is expected to generate 0.64 times more return on investment than Aberdeen China. However, The Gold Bullion is 1.56 times less risky than Aberdeen China. It trades about -0.05 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about -0.15 per unit of risk. If you would invest 2,718 in The Gold Bullion on August 27, 2024 and sell it today you would lose (42.00) from holding The Gold Bullion or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gold Bullion vs. Aberdeen China Oppty
Performance |
| Timeline |
| Gold Bullion |
| Aberdeen China Oppty |
The Gold and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Gold and Aberdeen China
The main advantage of trading using opposite The Gold and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gold 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.| The Gold vs. Quantified Market Leaders | The Gold vs. Quantified Managed Income | The Gold vs. Quantified Alternative Investment | The Gold vs. Quantified Stf Fund |
| Aberdeen China vs. Precious Metals And | Aberdeen China vs. Invesco Gold Special | Aberdeen China vs. Franklin Gold Precious | Aberdeen China vs. The Gold Bullion |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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