Correlation Between Asseco Business and M Food

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

Diversification Opportunities for Asseco Business and M Food

0.48

Correlation Coefficient

Asseco Business  M Food

Very weak diversification

The 3 months correlation between Asseco and MFD is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Business Solutions and M Food SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Food 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 M Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Food SA has no effect on the direction of Asseco Business i.e., Asseco Business and M Food go up and down completely randomly.

Pair Corralation between Asseco Business and M Food

Assuming the 90 days trading horizon Asseco Business Solutions is expected to under-perform the M Food. But the stock apears to be less risky and, when comparing its historical volatility, Asseco Business Solutions is 2.74 times less risky than M Food. The stock trades about -0.14 of its potential returns per unit of risk. The M Food SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  96.00  in M Food SA on September 3, 2024 and sell it today you would earn a total of  17.00  from holding M Food SA or generate 17.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	60.32%
Values	Daily Returns

Asseco Business Solutions  vs.  M Food SA

Asseco Business Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asseco Business Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

M Food SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in M Food SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, M Food reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asseco Business and M Food

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

The idea behind Asseco Business Solutions and M Food 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.