Correlation Between Associated Capital and Abrdn Emerging

Can any of the company-specific risk be diversified away by investing in both Associated Capital and Abrdn Emerging 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 Associated Capital and Abrdn Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Capital Group and Abrdn Emerging Markets, you can compare the effects of market volatilities on Associated Capital and Abrdn Emerging 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 Associated Capital with a short position of Abrdn Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Abrdn Emerging.

Diversification Opportunities for Associated Capital and Abrdn Emerging

0.26

Correlation Coefficient

Associated Capital  Abrdn Emerging

Modest diversification

The 3 months correlation between Associated and Abrdn is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Abrdn Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abrdn Emerging Markets and Associated Capital 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 Associated Capital Group are associated (or correlated) with Abrdn Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abrdn Emerging Markets has no effect on the direction of Associated Capital i.e., Associated Capital and Abrdn Emerging go up and down completely randomly.

Pair Corralation between Associated Capital and Abrdn Emerging

Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 1.5 times more return on investment than Abrdn Emerging. However, Associated Capital is 1.5 times more volatile than Abrdn Emerging Markets. It trades about 0.12 of its potential returns per unit of risk. Abrdn Emerging Markets is currently generating about -0.01 per unit of risk. If you would invest  3,178  in Associated Capital Group on August 30, 2024 and sell it today you would earn a total of  441.00  from holding Associated Capital Group or generate 13.88% return on investment over 90 days.

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

Associated Capital Group  vs.  Abrdn Emerging Markets

Associated Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Associated Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Abrdn Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abrdn Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Abrdn Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Associated Capital and Abrdn Emerging

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

The idea behind Associated Capital Group and Abrdn Emerging Markets 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.