Correlation Between Asseco Poland and CEZ As
Can any of the company-specific risk be diversified away by investing in both Asseco Poland and CEZ As 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 CEZ As 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 CEZ as, you can compare the effects of market volatilities on Asseco Poland and CEZ As 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 CEZ As. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco Poland and CEZ As.
Diversification Opportunities for Asseco Poland and CEZ As
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asseco and CEZ is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Poland SA and CEZ as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ as 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 CEZ As. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ as has no effect on the direction of Asseco Poland i.e., Asseco Poland and CEZ As go up and down completely randomly.
Pair Corralation between Asseco Poland and CEZ As
Assuming the 90 days trading horizon Asseco Poland SA is expected to generate 0.92 times more return on investment than CEZ As. However, Asseco Poland SA is 1.08 times less risky than CEZ As. It trades about 0.09 of its potential returns per unit of risk. CEZ as is currently generating about 0.07 per unit of risk. If you would invest 7,676 in Asseco Poland SA on September 24, 2024 and sell it today you would earn a total of 1,699 from holding Asseco Poland SA or generate 22.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Asseco Poland SA vs. CEZ as
Performance |
Timeline |
Asseco Poland SA |
CEZ as |
Asseco Poland and CEZ As Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asseco Poland and CEZ As
The main advantage of trading using opposite Asseco Poland and CEZ As positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asseco Poland position performs unexpectedly, CEZ As 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 CEZ As will offset losses from the drop in CEZ As' long position.Asseco Poland vs. Asseco Business Solutions | Asseco Poland vs. LSI Software SA | Asseco Poland vs. Quantum Software SA |
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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 Stocks Directory module to find actively traded stocks across global markets.
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