Correlation Between Sprott Physical and Abrdn Asia

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

By analyzing existing cross correlation between Sprott Physical Platinum and abrdn Asia Pacific, you can compare the effects of market volatilities on Sprott Physical and Abrdn Asia 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 Sprott Physical with a short position of Abrdn Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Abrdn Asia.

Diversification Opportunities for Sprott Physical and Abrdn Asia

0.34

Correlation Coefficient

Sprott Physical  Abrdn Asia

Weak diversification

The 3 months correlation between Sprott and Abrdn is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Platinum and abrdn Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Asia Pacific and Sprott Physical 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 Sprott Physical Platinum are associated (or correlated) with Abrdn Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Asia Pacific has no effect on the direction of Sprott Physical i.e., Sprott Physical and Abrdn Asia go up and down completely randomly.

Pair Corralation between Sprott Physical and Abrdn Asia

Assuming the 90 days trading horizon Sprott Physical Platinum is expected to under-perform the Abrdn Asia. In addition to that, Sprott Physical is 3.04 times more volatile than abrdn Asia Pacific. It trades about -0.01 of its total potential returns per unit of risk. abrdn Asia Pacific is currently generating about 0.09 per unit of volatility. If you would invest  271.00  in abrdn Asia Pacific on September 12, 2024 and sell it today you would earn a total of  8.00  from holding abrdn Asia Pacific or generate 2.95% return on investment over 90 days.

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

Sprott Physical Platinum  vs.  abrdn Asia Pacific

Sprott Physical Platinum

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sprott Physical Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

abrdn Asia Pacific

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Asia Pacific are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Abrdn Asia is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sprott Physical and Abrdn Asia

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

The idea behind Sprott Physical Platinum and abrdn Asia Pacific 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.