Correlation Between Asseco Business and Kruk SA

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

Diversification Opportunities for Asseco Business and Kruk SA

0.29

Correlation Coefficient

Asseco Business  Kruk SA

Modest diversification

The 3 months correlation between Asseco and Kruk is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Business Solutions and Kruk SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kruk SA 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 Kruk SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kruk SA has no effect on the direction of Asseco Business i.e., Asseco Business and Kruk SA go up and down completely randomly.

Pair Corralation between Asseco Business and Kruk SA

Assuming the 90 days trading horizon Asseco Business Solutions is expected to generate 0.86 times more return on investment than Kruk SA. However, Asseco Business Solutions is 1.17 times less risky than Kruk SA. It trades about 0.2 of its potential returns per unit of risk. Kruk SA is currently generating about -0.15 per unit of risk. If you would invest  6,380  in Asseco Business Solutions on December 4, 2024 and sell it today you would earn a total of  460.00  from holding Asseco Business Solutions or generate 7.21% return on investment over 90 days.

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

Asseco Business Solutions  vs.  Kruk 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 18 (%) 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.

Kruk SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kruk SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Asseco Business and Kruk SA

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

The idea behind Asseco Business Solutions and Kruk 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.