Correlation Between HM Inwest and Asseco Poland

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

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

Diversification Opportunities for HM Inwest and Asseco Poland

-0.16

Correlation Coefficient

HM Inwest  Asseco Poland

Good diversification

The 3 months correlation between HMI and Asseco is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding HM Inwest SA and Asseco Poland SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asseco Poland SA and HM Inwest 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 HM Inwest SA are associated (or correlated) with Asseco Poland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asseco Poland SA has no effect on the direction of HM Inwest i.e., HM Inwest and Asseco Poland go up and down completely randomly.

Pair Corralation between HM Inwest and Asseco Poland

Assuming the 90 days trading horizon HM Inwest SA is expected to generate 2.23 times more return on investment than Asseco Poland. However, HM Inwest is 2.23 times more volatile than Asseco Poland SA. It trades about 0.14 of its potential returns per unit of risk. Asseco Poland SA is currently generating about 0.0 per unit of risk. If you would invest  3,690  in HM Inwest SA on September 2, 2024 and sell it today you would earn a total of  1,110  from holding HM Inwest SA or generate 30.08% return on investment over 90 days.

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

HM Inwest SA  vs.  Asseco Poland SA

HM Inwest SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest reported solid returns over the last few months and may actually be approaching a breakup point.

Asseco Poland SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asseco Poland SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Asseco Poland 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 HM Inwest and Asseco Poland

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

The idea behind HM Inwest SA and Asseco Poland 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.