Correlation Between Aberdeen Global and Aberdeen Standard

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

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

Diversification Opportunities for Aberdeen Global and Aberdeen Standard

0.5

Correlation Coefficient

Aberdeen Global  Aberdeen Standard

Very weak diversification

The 3 months correlation between Aberdeen and Aberdeen is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global Premier and Aberdeen Standard Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Standard Global and Aberdeen Global 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 Global Premier are associated (or correlated) with Aberdeen Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Standard Global has no effect on the direction of Aberdeen Global i.e., Aberdeen Global and Aberdeen Standard go up and down completely randomly.

Pair Corralation between Aberdeen Global and Aberdeen Standard

Considering the 90-day investment horizon Aberdeen Global Premier is expected to generate 1.5 times more return on investment than Aberdeen Standard. However, Aberdeen Global is 1.5 times more volatile than Aberdeen Standard Global. It trades about 0.13 of its potential returns per unit of risk. Aberdeen Standard Global is currently generating about 0.08 per unit of risk. If you would invest  426.00  in Aberdeen Global Premier on September 1, 2024 and sell it today you would earn a total of  15.00  from holding Aberdeen Global Premier or generate 3.52% return on investment over 90 days.

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

Aberdeen Global Premier  vs.  Aberdeen Standard Global

Aberdeen Global Premier

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Global Premier are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable basic indicators, Aberdeen Global is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Aberdeen Standard Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Standard Global are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong technical and fundamental indicators, Aberdeen Standard is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Aberdeen Global and Aberdeen Standard

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

The idea behind Aberdeen Global Premier and Aberdeen Standard Global 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.