Correlation Between Asseco South and Esotiq Henderson

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

Diversification Opportunities for Asseco South and Esotiq Henderson

0.3

Correlation Coefficient

Asseco South  Esotiq Henderson

Weak diversification

The 3 months correlation between Asseco and Esotiq is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Asseco South Eastern and Esotiq Henderson SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esotiq Henderson 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 Esotiq Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esotiq Henderson has no effect on the direction of Asseco South i.e., Asseco South and Esotiq Henderson go up and down completely randomly.

Pair Corralation between Asseco South and Esotiq Henderson

Assuming the 90 days trading horizon Asseco South is expected to generate 1.32 times less return on investment than Esotiq Henderson. But when comparing it to its historical volatility, Asseco South Eastern is 2.55 times less risky than Esotiq Henderson. It trades about 0.03 of its potential returns per unit of risk. Esotiq Henderson SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,090  in Esotiq Henderson SA on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Esotiq Henderson SA or generate 0.0% return on investment over 90 days.

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

Asseco South Eastern  vs.  Esotiq Henderson SA

Asseco South Eastern

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asseco South Eastern are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Esotiq Henderson

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Esotiq Henderson SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Esotiq Henderson is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Asseco South and Esotiq Henderson

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

The idea behind Asseco South Eastern and Esotiq Henderson 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.