Correlation Between Cellnex Telecom and Aberdeen Diversified

Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom and Aberdeen Diversified 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 Cellnex Telecom and Aberdeen Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cellnex Telecom SA and Aberdeen Diversified Income, you can compare the effects of market volatilities on Cellnex Telecom and Aberdeen Diversified 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 Cellnex Telecom with a short position of Aberdeen Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and Aberdeen Diversified.

Diversification Opportunities for Cellnex Telecom and Aberdeen Diversified

0.29

Correlation Coefficient

Cellnex Telecom  Aberdeen Diversified

Modest diversification

The 3 months correlation between Cellnex and Aberdeen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Aberdeen Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Diversified and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with Aberdeen Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Diversified has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Aberdeen Diversified go up and down completely randomly.

Pair Corralation between Cellnex Telecom and Aberdeen Diversified

Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the Aberdeen Diversified. But the stock apears to be less risky and, when comparing its historical volatility, Cellnex Telecom SA is 1.45 times less risky than Aberdeen Diversified. The stock trades about -0.01 of its potential returns per unit of risk. The Aberdeen Diversified Income is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,257  in Aberdeen Diversified Income on September 1, 2024 and sell it today you would lose (17.00) from holding Aberdeen Diversified Income or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cellnex Telecom SA  vs.  Aberdeen Diversified Income

Cellnex Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cellnex Telecom is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aberdeen Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Diversified Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aberdeen Diversified is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cellnex Telecom and Aberdeen Diversified

The main advantage of trading using opposite Cellnex Telecom and Aberdeen Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellnex Telecom position performs unexpectedly, Aberdeen Diversified 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 Diversified will offset losses from the drop in Aberdeen Diversified's long position.

The idea behind Cellnex Telecom SA and Aberdeen Diversified Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.