Correlation Between Ultimate Games and Asseco Business

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

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

Diversification Opportunities for Ultimate Games and Asseco Business

0.74

Correlation Coefficient

Ultimate Games  Asseco Business

Poor diversification

The 3 months correlation between Ultimate and Asseco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ultimate Games 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 Ultimate Games 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 Ultimate Games 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 Ultimate Games i.e., Ultimate Games and Asseco Business go up and down completely randomly.

Pair Corralation between Ultimate Games and Asseco Business

Assuming the 90 days trading horizon Ultimate Games SA is expected to under-perform the Asseco Business. But the stock apears to be less risky and, when comparing its historical volatility, Ultimate Games SA is 1.03 times less risky than Asseco Business. The stock trades about -0.19 of its potential returns per unit of risk. The Asseco Business Solutions is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  6,020  in Asseco Business Solutions on September 3, 2024 and sell it today you would lose (920.00) from holding Asseco Business Solutions or give up 15.28% of portfolio value over 90 days.

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

Ultimate Games SA  vs.  Asseco Business Solutions

Ultimate Games SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultimate Games SA 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Asseco Business Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asseco Business Solutions 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ultimate Games and Asseco Business

The main advantage of trading using opposite Ultimate Games and Asseco Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultimate Games 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 Ultimate Games 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.