Correlation Between ULMA Construccion and Asseco Business

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

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

Diversification Opportunities for ULMA Construccion and Asseco Business

-0.77

Correlation Coefficient

ULMA Construccion  Asseco Business

Pay attention - limited upside

The 3 months correlation between ULMA and Asseco is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding ULMA Construccion Polska 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 ULMA Construccion 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 ULMA Construccion Polska 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 ULMA Construccion i.e., ULMA Construccion and Asseco Business go up and down completely randomly.

Pair Corralation between ULMA Construccion and Asseco Business

Assuming the 90 days trading horizon ULMA Construccion Polska is expected to under-perform the Asseco Business. But the stock apears to be less risky and, when comparing its historical volatility, ULMA Construccion Polska is 1.18 times less risky than Asseco Business. The stock trades about -0.04 of its potential returns per unit of risk. The Asseco Business Solutions is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,680  in Asseco Business Solutions on December 29, 2024 and sell it today you would earn a total of  1,200  from holding Asseco Business Solutions or generate 21.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

ULMA Construccion Polska  vs.  Asseco Business Solutions

ULMA Construccion Polska

Risk-Adjusted Performance

Very Weak

Over the last 90 days ULMA Construccion Polska has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ULMA Construccion 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asseco Business Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asseco Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ULMA Construccion and Asseco Business

The main advantage of trading using opposite ULMA Construccion and Asseco Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULMA Construccion 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 ULMA Construccion Polska 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.