Correlation Between Aberdeen Japan and Aberdeen Australia

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

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

Diversification Opportunities for Aberdeen Japan and Aberdeen Australia

0.47

Correlation Coefficient

Aberdeen Japan  Aberdeen Australia

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 Japan Equity and Aberdeen Australia Ef in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Australia and Aberdeen Japan 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 Japan Equity are associated (or correlated) with Aberdeen Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Australia has no effect on the direction of Aberdeen Japan i.e., Aberdeen Japan and Aberdeen Australia go up and down completely randomly.

Pair Corralation between Aberdeen Japan and Aberdeen Australia

Considering the 90-day investment horizon Aberdeen Japan Equity is expected to under-perform the Aberdeen Australia. In addition to that, Aberdeen Japan is 1.11 times more volatile than Aberdeen Australia Ef. It trades about -0.03 of its total potential returns per unit of risk. Aberdeen Australia Ef is currently generating about 0.09 per unit of volatility. 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 Japan Equity  vs.  Aberdeen Australia Ef

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.

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.

Pair Trading with Aberdeen Japan and Aberdeen Australia

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

The idea behind Aberdeen Japan Equity and Aberdeen Australia Ef 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.