Correlation Between Aberdeen Australia and Aberdeen Japan

Can any of the company-specific risk be diversified away by investing in both Aberdeen Australia and Aberdeen Japan 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 Aberdeen Japan 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 Aberdeen Japan Equity, you can compare the effects of market volatilities on Aberdeen Australia and Aberdeen Japan 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 Aberdeen Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Australia and Aberdeen Japan.

Diversification Opportunities for Aberdeen Australia and Aberdeen Japan

0.47

Correlation Coefficient

Aberdeen Australia  Aberdeen Japan

Very weak diversification

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

Pair Corralation between Aberdeen Australia and Aberdeen Japan

Considering the 90-day investment horizon Aberdeen Australia Ef is expected to generate 0.9 times more return on investment than Aberdeen Japan. However, Aberdeen Australia Ef is 1.11 times less risky than Aberdeen Japan. It trades about 0.09 of its potential returns per unit of risk. Aberdeen Japan Equity is currently generating about -0.03 per unit of risk. If you would invest  433.00  in Aberdeen Australia Ef on September 1, 2024 and sell it today you would earn a total of  23.00  from holding Aberdeen Australia Ef or generate 5.31% return on investment over 90 days.

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

Aberdeen Australia Ef  vs.  Aberdeen Japan Equity

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.

Aberdeen Japan Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Japan Equity has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable technical and fundamental indicators, Aberdeen Japan is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aberdeen Australia and Aberdeen Japan

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

The idea behind Aberdeen Australia Ef and Aberdeen Japan Equity 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.