Correlation Between Aberdeen Australia and New Germany

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

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

Diversification Opportunities for Aberdeen Australia and New Germany

0.17

Correlation Coefficient

Aberdeen Australia  New Germany

Average diversification

The 3 months correlation between Aberdeen and New is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Australia Ef and New Germany Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Germany Closed and Aberdeen Australia 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 Australia Ef are associated (or correlated) with New Germany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Germany Closed has no effect on the direction of Aberdeen Australia i.e., Aberdeen Australia and New Germany go up and down completely randomly.

Pair Corralation between Aberdeen Australia and New Germany

Considering the 90-day investment horizon Aberdeen Australia Ef is expected to generate 0.7 times more return on investment than New Germany. However, Aberdeen Australia Ef is 1.43 times less risky than New Germany. It trades about 0.36 of its potential returns per unit of risk. New Germany Closed is currently generating about -0.14 per unit of risk. If you would invest  426.00  in Aberdeen Australia Ef on September 1, 2024 and sell it today you would earn a total of  30.00  from holding Aberdeen Australia Ef or generate 7.04% return on investment over 90 days.

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

Aberdeen Australia Ef  vs.  New Germany Closed

Aberdeen Australia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Australia Ef are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Aberdeen Australia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

New Germany Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Germany Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable technical and fundamental indicators, New Germany is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aberdeen Australia and New Germany

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

The idea behind Aberdeen Australia Ef and New Germany Closed 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.