Correlation Between Asseco Business and ADX

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

By analyzing existing cross correlation between Asseco Business Solutions and ADX, you can compare the effects of market volatilities on Asseco Business and ADX 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 Asseco Business with a short position of ADX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco Business and ADX.

Diversification Opportunities for Asseco Business and ADX

0.13

Correlation Coefficient

Asseco Business  ADX

Average diversification

The 3 months correlation between Asseco and ADX is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Business Solutions and ADX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADX and Asseco Business 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 Asseco Business Solutions are associated (or correlated) with ADX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADX has no effect on the direction of Asseco Business i.e., Asseco Business and ADX go up and down completely randomly.

Pair Corralation between Asseco Business and ADX

Assuming the 90 days trading horizon Asseco Business is expected to generate 1.58 times less return on investment than ADX. But when comparing it to its historical volatility, Asseco Business Solutions is 1.81 times less risky than ADX. It trades about 0.07 of its potential returns per unit of risk. ADX is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  26.00  in ADX on October 5, 2024 and sell it today you would earn a total of  2.00  from holding ADX or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.96%
Values	Daily Returns

Asseco Business Solutions  vs.  ADX

Asseco Business Solutions

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Asseco Business Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Asseco Business may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ADX

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days ADX has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, ADX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asseco Business and ADX

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

The idea behind Asseco Business Solutions and ADX 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.

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 the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.