Correlation Between Aberdeen New and Scottish Mortgage

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

By analyzing existing cross correlation between Aberdeen New India and Scottish Mortgage Investment, you can compare the effects of market volatilities on Aberdeen New and Scottish Mortgage 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 New with a short position of Scottish Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen New and Scottish Mortgage.

Diversification Opportunities for Aberdeen New and Scottish Mortgage

-0.47

Correlation Coefficient

Aberdeen New  Scottish Mortgage

Very good diversification

The 3 months correlation between Aberdeen and Scottish is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen New India and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and Aberdeen New 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 New India are associated (or correlated) with Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of Aberdeen New i.e., Aberdeen New and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Aberdeen New and Scottish Mortgage

Assuming the 90 days trading horizon Aberdeen New India is expected to under-perform the Scottish Mortgage. But the etf apears to be less risky and, when comparing its historical volatility, Aberdeen New India is 1.12 times less risky than Scottish Mortgage. The etf trades about -0.01 of its potential returns per unit of risk. The Scottish Mortgage Investment is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  81,159  in Scottish Mortgage Investment on September 3, 2024 and sell it today you would earn a total of  13,121  from holding Scottish Mortgage Investment or generate 16.17% return on investment over 90 days.

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

Aberdeen New India  vs.  Scottish Mortgage Investment

Aberdeen New India

Risk-Adjusted Performance

0 of 100

Very Weak

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

Scottish Mortgage

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Scottish Mortgage exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aberdeen New and Scottish Mortgage

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

The idea behind Aberdeen New India and Scottish Mortgage Investment 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.