Correlation Between Asseco Business and Tower Investments
Can any of the company-specific risk be diversified away by investing in both Asseco Business and Tower Investments 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 Business and Tower Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asseco Business Solutions and Tower Investments SA, you can compare the effects of market volatilities on Asseco Business and Tower Investments 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 Business with a short position of Tower Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco Business and Tower Investments.
Diversification Opportunities for Asseco Business and Tower Investments
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asseco and Tower is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Business Solutions and Tower Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Investments and Asseco Business 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 Business Solutions are associated (or correlated) with Tower Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Investments has no effect on the direction of Asseco Business i.e., Asseco Business and Tower Investments go up and down completely randomly.
Pair Corralation between Asseco Business and Tower Investments
Assuming the 90 days trading horizon Asseco Business Solutions is expected to generate 0.26 times more return on investment than Tower Investments. However, Asseco Business Solutions is 3.81 times less risky than Tower Investments. It trades about 0.07 of its potential returns per unit of risk. Tower Investments SA is currently generating about -0.01 per unit of risk. If you would invest 3,503 in Asseco Business Solutions on August 30, 2024 and sell it today you would earn a total of 1,817 from holding Asseco Business Solutions or generate 51.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asseco Business Solutions vs. Tower Investments SA
Performance |
| Timeline |
| Asseco Business Solutions |
| Tower Investments |
Asseco Business and Tower Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asseco Business and Tower Investments
The main advantage of trading using opposite Asseco Business and Tower Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asseco Business position performs unexpectedly, Tower Investments 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 Tower Investments will offset losses from the drop in Tower Investments' long position.The idea behind Asseco Business Solutions and Tower Investments 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.| Tower Investments vs. Dom Development SA | Tower Investments vs. Asseco Business Solutions | Tower Investments vs. Detalion Games SA | Tower Investments vs. CFI Holding SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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