Correlation Between Shopify and Abrdn Asia

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

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

Diversification Opportunities for Shopify and Abrdn Asia

0.81

Correlation Coefficient

Shopify  Abrdn Asia

Very poor diversification

The 3 months correlation between Shopify and Abrdn is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shopify 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 Shopify 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 Shopify 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 Shopify i.e., Shopify and Abrdn Asia go up and down completely randomly.

Pair Corralation between Shopify and Abrdn Asia

Assuming the 90 days trading horizon Shopify is expected to generate 4.28 times more return on investment than Abrdn Asia. However, Shopify is 4.28 times more volatile than abrdn Asia Pacific. It trades about 0.23 of its potential returns per unit of risk. abrdn Asia Pacific is currently generating about 0.17 per unit of risk. If you would invest  11,292  in Shopify on April 20, 2025 and sell it today you would earn a total of  6,144  from holding Shopify or generate 54.41% return on investment over 90 days.

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

Shopify  vs.  abrdn Asia Pacific

Shopify

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Shopify displayed solid returns over the last few months and may actually be approaching a breakup point.

abrdn Asia Pacific

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Asia Pacific are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Abrdn Asia may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Shopify and Abrdn Asia

The main advantage of trading using opposite Shopify and Abrdn Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify 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 Shopify 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 Global Correlations module to find global opportunities by holding instruments from different markets.