Correlation Between Asseco Business and Esotiq Henderson

Can any of the company-specific risk be diversified away by investing in both Asseco Business and Esotiq Henderson 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 Esotiq Henderson 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 Esotiq Henderson SA, you can compare the effects of market volatilities on Asseco Business and Esotiq Henderson 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 Esotiq Henderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco Business and Esotiq Henderson.

Diversification Opportunities for Asseco Business and Esotiq Henderson

-0.66

Correlation Coefficient

Asseco Business  Esotiq Henderson

Excellent diversification

The 3 months correlation between Asseco and Esotiq is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Business Solutions and Esotiq Henderson SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esotiq Henderson 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 Esotiq Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esotiq Henderson has no effect on the direction of Asseco Business i.e., Asseco Business and Esotiq Henderson go up and down completely randomly.

Pair Corralation between Asseco Business and Esotiq Henderson

Assuming the 90 days trading horizon Asseco Business Solutions is expected to generate 1.11 times more return on investment than Esotiq Henderson. However, Asseco Business is 1.11 times more volatile than Esotiq Henderson SA. It trades about 0.24 of its potential returns per unit of risk. Esotiq Henderson SA is currently generating about -0.05 per unit of risk. If you would invest  5,200  in Asseco Business Solutions on December 2, 2024 and sell it today you would earn a total of  1,680  from holding Asseco Business Solutions or generate 32.31% return on investment over 90 days.

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

Asseco Business Solutions  vs.  Esotiq Henderson SA

Asseco Business Solutions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asseco Business Solutions are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asseco Business reported solid returns over the last few months and may actually be approaching a breakup point.

Esotiq Henderson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esotiq Henderson SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Esotiq Henderson is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Asseco Business and Esotiq Henderson

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

The idea behind Asseco Business Solutions and Esotiq Henderson SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.