Correlation Between Enter Air and Asseco Business

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

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

Diversification Opportunities for Enter Air and Asseco Business

-0.45

Correlation Coefficient

Enter Air  Asseco Business

Very good diversification

The 3 months correlation between Enter and Asseco is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Enter Air SA and Asseco Business Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asseco Business Solutions and Enter Air 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 Enter Air SA are associated (or correlated) with Asseco Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asseco Business Solutions has no effect on the direction of Enter Air i.e., Enter Air and Asseco Business go up and down completely randomly.

Pair Corralation between Enter Air and Asseco Business

Assuming the 90 days trading horizon Enter Air SA is expected to under-perform the Asseco Business. But the stock apears to be less risky and, when comparing its historical volatility, Enter Air SA is 1.05 times less risky than Asseco Business. The stock trades about -0.27 of its potential returns per unit of risk. The Asseco Business Solutions is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,800  in Asseco Business Solutions on October 9, 2024 and sell it today you would earn a total of  240.00  from holding Asseco Business Solutions or generate 4.14% return on investment over 90 days.

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

Enter Air SA  vs.  Asseco Business Solutions

Enter Air SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asseco Business Solutions

Risk-Adjusted Performance

6 of 100

OK

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

Pair Trading with Enter Air and Asseco Business

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

The idea behind Enter Air SA and Asseco Business Solutions 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.