Correlation Between Aberdeen Ultra and HSBC US

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Can any of the company-specific risk be diversified away by investing in both Aberdeen Ultra and HSBC US 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 Ultra and HSBC US into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Ultra Short and HSBC US Treasury, you can compare the effects of market volatilities on Aberdeen Ultra and HSBC US 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 Ultra with a short position of HSBC US. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Ultra and HSBC US.

Diversification Opportunities for Aberdeen Ultra and HSBC US

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Aberdeen and HTYXX is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Ultra Short and HSBC US Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC US Treasury and Aberdeen Ultra 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 Ultra Short are associated (or correlated) with HSBC US. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC US Treasury has no effect on the direction of Aberdeen Ultra i.e., Aberdeen Ultra and HSBC US go up and down completely randomly.

Pair Corralation between Aberdeen Ultra and HSBC US

Assuming the 90 days horizon Aberdeen Ultra Short is expected to under-perform the HSBC US. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aberdeen Ultra Short is 2201.08 times less risky than HSBC US. The mutual fund trades about -0.03 of its potential returns per unit of risk. The HSBC US Treasury is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.63  in HSBC US Treasury on July 3, 2022 and sell it today you would earn a total of  99.37  from holding HSBC US Treasury or generate 15773.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.2%
ValuesDaily Returns

Aberdeen Ultra Short  vs.  HSBC US Treasury

 Performance (%) 
       Timeline  
Aberdeen Ultra Short 
Aberdeen Performance
0 of 100
Over the last 90 days Aberdeen Ultra Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aberdeen Ultra is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Price Channel

HSBC US Treasury 
HTYXX Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in HSBC US Treasury are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly uncertain basic indicators, HSBC US showed solid returns over the last few months and may actually be approaching a breakup point.

HTYXX Price Channel

Aberdeen Ultra and HSBC US Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aberdeen Ultra and HSBC US

The main advantage of trading using opposite Aberdeen Ultra and HSBC US positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Ultra position performs unexpectedly, HSBC US 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 HSBC US will offset losses from the drop in HSBC US's long position.
Aberdeen Ultra vs. Johnson Johnson
The idea behind Aberdeen Ultra Short and HSBC US Treasury 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.
HSBC US vs. Microsoft Corp
Check out your portfolio center. 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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