Correlation Between Asseco South and Centrum Finansowe

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

By analyzing existing cross correlation between Asseco South Eastern and Centrum Finansowe Banku, you can compare the effects of market volatilities on Asseco South and Centrum Finansowe 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 South with a short position of Centrum Finansowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco South and Centrum Finansowe.

Diversification Opportunities for Asseco South and Centrum Finansowe

0.2

Correlation Coefficient

Asseco South  Centrum Finansowe

Modest diversification

The 3 months correlation between Asseco and Centrum is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Asseco South Eastern and Centrum Finansowe Banku in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrum Finansowe Banku and Asseco South 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 South Eastern are associated (or correlated) with Centrum Finansowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrum Finansowe Banku has no effect on the direction of Asseco South i.e., Asseco South and Centrum Finansowe go up and down completely randomly.

Pair Corralation between Asseco South and Centrum Finansowe

Assuming the 90 days trading horizon Asseco South is expected to generate 3.66 times less return on investment than Centrum Finansowe. But when comparing it to its historical volatility, Asseco South Eastern is 1.52 times less risky than Centrum Finansowe. It trades about 0.02 of its potential returns per unit of risk. Centrum Finansowe Banku is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  344.00  in Centrum Finansowe Banku on November 1, 2024 and sell it today you would earn a total of  176.00  from holding Centrum Finansowe Banku or generate 51.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Asseco South Eastern  vs.  Centrum Finansowe Banku

Asseco South Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asseco South Eastern has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Asseco South is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Centrum Finansowe Banku

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centrum Finansowe Banku 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 March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Asseco South and Centrum Finansowe

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

The idea behind Asseco South Eastern and Centrum Finansowe Banku 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.