Correlation Between Asseco Poland and Biztech Konsulting

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

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

Diversification Opportunities for Asseco Poland and Biztech Konsulting

0.58

Correlation Coefficient

Asseco Poland  Biztech Konsulting

Very weak diversification

The 3 months correlation between Asseco and Biztech is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Poland SA and Biztech Konsulting SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biztech Konsulting and Asseco Poland 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 Poland SA are associated (or correlated) with Biztech Konsulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biztech Konsulting has no effect on the direction of Asseco Poland i.e., Asseco Poland and Biztech Konsulting go up and down completely randomly.

Pair Corralation between Asseco Poland and Biztech Konsulting

Assuming the 90 days trading horizon Asseco Poland SA is expected to generate 0.31 times more return on investment than Biztech Konsulting. However, Asseco Poland SA is 3.22 times less risky than Biztech Konsulting. It trades about 0.3 of its potential returns per unit of risk. Biztech Konsulting SA is currently generating about 0.09 per unit of risk. If you would invest  8,605  in Asseco Poland SA on September 24, 2024 and sell it today you would earn a total of  770.00  from holding Asseco Poland SA or generate 8.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Asseco Poland SA  vs.  Biztech Konsulting SA

Asseco Poland SA

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asseco Poland SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asseco Poland may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Biztech Konsulting

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Asseco Poland and Biztech Konsulting

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

The idea behind Asseco Poland SA and Biztech Konsulting 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 Transaction History module to view history of all your transactions and understand their impact on performance.