Correlation Between Asseco South and Echo Investment
Can any of the company-specific risk be diversified away by investing in both Asseco South and Echo Investment 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 South and Echo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asseco South Eastern and Echo Investment SA, you can compare the effects of market volatilities on Asseco South and Echo Investment 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 South with a short position of Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco South and Echo Investment.
Diversification Opportunities for Asseco South and Echo Investment
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asseco and Echo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Asseco South Eastern and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment SA and Asseco South 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 South Eastern are associated (or correlated) with Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of Asseco South i.e., Asseco South and Echo Investment go up and down completely randomly.
Pair Corralation between Asseco South and Echo Investment
Assuming the 90 days trading horizon Asseco South Eastern is expected to generate 0.69 times more return on investment than Echo Investment. However, Asseco South Eastern is 1.45 times less risky than Echo Investment. It trades about 0.01 of its potential returns per unit of risk. Echo Investment SA is currently generating about -0.04 per unit of risk. If you would invest 4,960 in Asseco South Eastern on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Asseco South Eastern or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asseco South Eastern vs. Echo Investment SA
Performance |
| Timeline |
| Asseco South Eastern |
| Echo Investment SA |
Asseco South and Echo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asseco South and Echo Investment
The main advantage of trading using opposite Asseco South and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asseco South position performs unexpectedly, Echo Investment 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 Echo Investment will offset losses from the drop in Echo Investment's long position.| Asseco South vs. Echo Investment SA | Asseco South vs. Mlk Foods Public | Asseco South vs. Quantum Software SA | Asseco South vs. Cloud Technologies SA |
| Echo Investment vs. Asseco South Eastern | Echo Investment vs. Vercom SA | Echo Investment vs. CFI Holding SA | Echo Investment vs. Gobarto 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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