Correlation Between Asseco Business and Globe Trade

Can any of the company-specific risk be diversified away by investing in both Asseco Business and Globe Trade 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 Globe Trade 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 Globe Trade Centre, you can compare the effects of market volatilities on Asseco Business and Globe Trade 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 Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asseco Business and Globe Trade.

Diversification Opportunities for Asseco Business and Globe Trade

-0.57

Correlation Coefficient

Asseco Business  Globe Trade

Excellent diversification

The 3 months correlation between Asseco and Globe is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Business Solutions and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre 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 Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Asseco Business i.e., Asseco Business and Globe Trade go up and down completely randomly.

Pair Corralation between Asseco Business and Globe Trade

Assuming the 90 days trading horizon Asseco Business Solutions is expected to under-perform the Globe Trade. But the stock apears to be less risky and, when comparing its historical volatility, Asseco Business Solutions is 1.64 times less risky than Globe Trade. The stock trades about -0.14 of its potential returns per unit of risk. The Globe Trade Centre is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  429.00  in Globe Trade Centre on August 27, 2024 and sell it today you would earn a total of  16.00  from holding Globe Trade Centre or generate 3.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Asseco Business Solutions  vs.  Globe Trade Centre

Asseco Business Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asseco Business Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Asseco Business is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Globe Trade Centre

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Trade Centre are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Globe Trade may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Asseco Business and Globe Trade

The main advantage of trading using opposite Asseco Business and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asseco Business position performs unexpectedly, Globe Trade 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 Globe Trade will offset losses from the drop in Globe Trade's long position.

The idea behind Asseco Business Solutions and Globe Trade Centre 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.