Correlation Between Asseco South and TLT
Can any of the company-specific risk be diversified away by investing in both Asseco South and TLT 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 TLT 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 TLT, you can compare the effects of market volatilities on Asseco South and TLT 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 TLT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco South and TLT.
Diversification Opportunities for Asseco South and TLT
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asseco and TLT is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Asseco South Eastern and TLT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLT 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 TLT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLT has no effect on the direction of Asseco South i.e., Asseco South and TLT go up and down completely randomly.
Pair Corralation between Asseco South and TLT
Assuming the 90 days trading horizon Asseco South Eastern is expected to under-perform the TLT. But the stock apears to be less risky and, when comparing its historical volatility, Asseco South Eastern is 5.04 times less risky than TLT. The stock trades about -0.14 of its potential returns per unit of risk. The TLT is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 13.00 in TLT on August 30, 2024 and sell it today you would earn a total of 0.00 from holding TLT or generate 0.0% 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. TLT
Performance |
| Timeline |
| Asseco South Eastern |
| TLT |
Asseco South and TLT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asseco South and TLT
The main advantage of trading using opposite Asseco South and TLT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asseco South position performs unexpectedly, TLT 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 TLT will offset losses from the drop in TLT's long position.| Asseco South vs. Bank Millennium SA | Asseco South vs. Quantum Software SA | Asseco South vs. Santander Bank Polska | Asseco South vs. Echo Investment 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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