Correlation Between Asseco Poland and Powszechny Zaklad

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

Diversification Opportunities for Asseco Poland and Powszechny Zaklad

0.63

Correlation Coefficient

Asseco Poland  Powszechny Zaklad

Poor diversification

The 3 months correlation between Asseco and Powszechny is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Poland SA and Powszechny Zaklad Ubezpieczen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powszechny Zaklad 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 Powszechny Zaklad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powszechny Zaklad has no effect on the direction of Asseco Poland i.e., Asseco Poland and Powszechny Zaklad go up and down completely randomly.

Pair Corralation between Asseco Poland and Powszechny Zaklad

Assuming the 90 days trading horizon Asseco Poland is expected to generate 4.61 times less return on investment than Powszechny Zaklad. But when comparing it to its historical volatility, Asseco Poland SA is 1.29 times less risky than Powszechny Zaklad. It trades about 0.05 of its potential returns per unit of risk. Powszechny Zaklad Ubezpieczen is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,078  in Powszechny Zaklad Ubezpieczen on September 24, 2024 and sell it today you would earn a total of  532.00  from holding Powszechny Zaklad Ubezpieczen or generate 13.05% return on investment over 90 days.

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

Asseco Poland SA  vs.  Powszechny Zaklad Ubezpieczen

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.

Powszechny Zaklad

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechny Zaklad Ubezpieczen are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Powszechny Zaklad may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Asseco Poland and Powszechny Zaklad

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

The idea behind Asseco Poland SA and Powszechny Zaklad Ubezpieczen 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.