Correlation Between Uniteds and Abrdn Asia
Can any of the company-specific risk be diversified away by investing in both Uniteds and Abrdn Asia 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 Uniteds and Abrdn Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniteds Limited and abrdn Asia Pacific, you can compare the effects of market volatilities on Uniteds and Abrdn Asia 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 Uniteds with a short position of Abrdn Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniteds and Abrdn Asia.
Diversification Opportunities for Uniteds and Abrdn Asia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Uniteds and Abrdn is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Uniteds Limited and abrdn Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Asia Pacific and Uniteds 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 Uniteds Limited are associated (or correlated) with Abrdn Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Asia Pacific has no effect on the direction of Uniteds i.e., Uniteds and Abrdn Asia go up and down completely randomly.
Pair Corralation between Uniteds and Abrdn Asia
Assuming the 90 days trading horizon Uniteds Limited is expected to generate 0.99 times more return on investment than Abrdn Asia. However, Uniteds Limited is 1.01 times less risky than Abrdn Asia. It trades about 0.24 of its potential returns per unit of risk. abrdn Asia Pacific is currently generating about -0.05 per unit of risk. If you would invest 12,645 in Uniteds Limited on September 1, 2024 and sell it today you would earn a total of 410.00 from holding Uniteds Limited or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uniteds Limited vs. abrdn Asia Pacific
Performance |
| Timeline |
| Uniteds Limited |
| abrdn Asia Pacific |
Uniteds and Abrdn Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniteds and Abrdn Asia
The main advantage of trading using opposite Uniteds and Abrdn Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniteds position performs unexpectedly, Abrdn Asia 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 Abrdn Asia will offset losses from the drop in Abrdn Asia's long position.| Uniteds vs. Economic Investment Trust | Uniteds vs. Canadian General Investments | Uniteds vs. E L Financial Corp | Uniteds vs. Clairvest Group |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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