Correlation Between Asseco South and HM Inwest
Can any of the company-specific risk be diversified away by investing in both Asseco South and HM Inwest 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 HM Inwest 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 HM Inwest SA, you can compare the effects of market volatilities on Asseco South and HM Inwest 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 HM Inwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco South and HM Inwest.
Diversification Opportunities for Asseco South and HM Inwest
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asseco and HMI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Asseco South Eastern and HM Inwest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HM Inwest 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 HM Inwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HM Inwest SA has no effect on the direction of Asseco South i.e., Asseco South and HM Inwest go up and down completely randomly.
Pair Corralation between Asseco South and HM Inwest
Assuming the 90 days trading horizon Asseco South is expected to generate 1.02 times less return on investment than HM Inwest. But when comparing it to its historical volatility, Asseco South Eastern is 2.02 times less risky than HM Inwest. It trades about 0.13 of its potential returns per unit of risk. HM Inwest SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,220 in HM Inwest SA on January 16, 2025 and sell it today you would earn a total of 530.00 from holding HM Inwest SA or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asseco South Eastern vs. HM Inwest SA
Performance |
| Timeline |
| Asseco South Eastern |
| HM Inwest SA |
Asseco South and HM Inwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asseco South and HM Inwest
The main advantage of trading using opposite Asseco South and HM Inwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asseco South position performs unexpectedly, HM Inwest 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 HM Inwest will offset losses from the drop in HM Inwest's long position.| Asseco South vs. Centrum Finansowe Banku | Asseco South vs. BNP Paribas Bank | Asseco South vs. Quantum Software SA | Asseco South vs. Intersport Polska SA |
| HM Inwest vs. Enter Air SA | HM Inwest vs. Echo Investment SA | HM Inwest vs. Inter Cars SA | HM Inwest vs. ING Bank lski |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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