Correlation Between Eagle Growth and Aberdeen Asia

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

By analyzing existing cross correlation between Eagle Growth Income and Aberdeen Asia Pacificome, you can compare the effects of market volatilities on Eagle Growth and Aberdeen 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 Eagle Growth with a short position of Aberdeen Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Growth and Aberdeen Asia.

Diversification Opportunities for Eagle Growth and Aberdeen Asia

-0.4

Correlation Coefficient

Eagle Growth  Aberdeen Asia

Very good diversification

The 3 months correlation between Eagle and Aberdeen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Growth Income and Aberdeen Asia Pacificome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Asia Pacificome and Eagle Growth 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 Eagle Growth Income are associated (or correlated) with Aberdeen Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Asia Pacificome has no effect on the direction of Eagle Growth i.e., Eagle Growth and Aberdeen Asia go up and down completely randomly.

Pair Corralation between Eagle Growth and Aberdeen Asia

Assuming the 90 days horizon Eagle Growth Income is expected to under-perform the Aberdeen Asia. In addition to that, Eagle Growth is 2.42 times more volatile than Aberdeen Asia Pacificome. It trades about -0.32 of its total potential returns per unit of risk. Aberdeen Asia Pacificome is currently generating about -0.31 per unit of volatility. If you would invest  1,737  in Aberdeen Asia Pacificome on September 24, 2024 and sell it today you would lose (33.00) from holding Aberdeen Asia Pacificome or give up 1.9% of portfolio value over 90 days.

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

Eagle Growth Income  vs.  Aberdeen Asia Pacificome

Eagle Growth Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Growth Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Eagle Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Asia Pacificome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberdeen Asia Pacificome has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Eagle Growth and Aberdeen Asia

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

The idea behind Eagle Growth Income and Aberdeen Asia Pacificome 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.