Correlation Between Aberdeen Small and Aberdeen

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

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

Diversification Opportunities for Aberdeen Small and Aberdeen

1.0

Correlation Coefficient

Aberdeen Small  Aberdeen

No risk reduction

The 3 months correlation between Aberdeen and Aberdeen is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Small Cap and Aberdeen Eq Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Eq Long and Aberdeen Small 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 Small Cap are associated (or correlated) with Aberdeen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Eq Long has no effect on the direction of Aberdeen Small i.e., Aberdeen Small and Aberdeen go up and down completely randomly.

Pair Corralation between Aberdeen Small and Aberdeen

Assuming the 90 days horizon Aberdeen Small Cap is expected to generate 1.02 times more return on investment than Aberdeen. However, Aberdeen Small is 1.02 times more volatile than Aberdeen Eq Long Short. It trades about 0.16 of its potential returns per unit of risk. Aberdeen Eq Long Short is currently generating about 0.16 per unit of risk. If you would invest  2,828  in Aberdeen Small Cap on September 15, 2024 and sell it today you would earn a total of  329.00  from holding Aberdeen Small Cap or generate 11.63% return on investment over 90 days.

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

Aberdeen Small Cap  vs.  Aberdeen Eq Long Short

Aberdeen Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aberdeen Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aberdeen Eq Long

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Eq Long Short are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aberdeen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aberdeen Small and Aberdeen

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

The idea behind Aberdeen Small Cap and Aberdeen Eq Long Short 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..