Correlation Between Asseco Business and NGG

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

Diversification Opportunities for Asseco Business and NGG

0.53

Correlation Coefficient

Asseco Business  NGG

Very weak diversification

The 3 months correlation between Asseco and NGG is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Asseco Business Solutions and NGG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGG 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 NGG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGG has no effect on the direction of Asseco Business i.e., Asseco Business and NGG go up and down completely randomly.

Pair Corralation between Asseco Business and NGG

Assuming the 90 days trading horizon Asseco Business Solutions is expected to generate 0.47 times more return on investment than NGG. However, Asseco Business Solutions is 2.11 times less risky than NGG. It trades about 0.02 of its potential returns per unit of risk. NGG is currently generating about -0.12 per unit of risk. If you would invest  5,780  in Asseco Business Solutions on September 14, 2024 and sell it today you would earn a total of  60.00  from holding Asseco Business Solutions or generate 1.04% return on investment over 90 days.

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

Asseco Business Solutions  vs.  NGG

Asseco Business Solutions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asseco Business Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

NGG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NGG has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Asseco Business and NGG

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

The idea behind Asseco Business Solutions and NGG 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.