Correlation Between Altisource Asset and Abrdn Emerging

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

By analyzing existing cross correlation between Altisource Asset Management and Abrdn Emerging Markets, you can compare the effects of market volatilities on Altisource Asset and Abrdn Emerging 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 Altisource Asset with a short position of Abrdn Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altisource Asset and Abrdn Emerging.

Diversification Opportunities for Altisource Asset and Abrdn Emerging

-0.64

Correlation Coefficient

Altisource Asset  Abrdn Emerging

Excellent diversification

The 3 months correlation between Altisource and Abrdn is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Altisource Asset Management and Abrdn Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abrdn Emerging Markets and Altisource Asset 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 Altisource Asset Management are associated (or correlated) with Abrdn Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abrdn Emerging Markets has no effect on the direction of Altisource Asset i.e., Altisource Asset and Abrdn Emerging go up and down completely randomly.

Pair Corralation between Altisource Asset and Abrdn Emerging

Given the investment horizon of 90 days Altisource Asset Management is expected to generate 8.03 times more return on investment than Abrdn Emerging. However, Altisource Asset is 8.03 times more volatile than Abrdn Emerging Markets. It trades about 0.03 of its potential returns per unit of risk. Abrdn Emerging Markets is currently generating about 0.07 per unit of risk. If you would invest  293.00  in Altisource Asset Management on April 27, 2024 and sell it today you would lose (6.00) from holding Altisource Asset Management or give up 2.05% of portfolio value over 90 days.

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

Altisource Asset Management  vs.  Abrdn Emerging Markets

Altisource Asset Man

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Altisource Asset Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Altisource Asset may actually be approaching a critical reversion point that can send shares even higher in August 2024.

Abrdn Emerging Markets

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abrdn Emerging Markets are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Abrdn Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altisource Asset and Abrdn Emerging

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

The idea behind Altisource Asset Management and Abrdn Emerging Markets 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.