Correlation Between Alior Bank and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Alior Bank and Solstad Offshore 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 Alior Bank and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alior Bank SA and Solstad Offshore ASA, you can compare the effects of market volatilities on Alior Bank and Solstad Offshore 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 Alior Bank with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Solstad Offshore.
Diversification Opportunities for Alior Bank and Solstad Offshore
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alior and Solstad is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and Alior Bank 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 Alior Bank SA are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Alior Bank i.e., Alior Bank and Solstad Offshore go up and down completely randomly.
Pair Corralation between Alior Bank and Solstad Offshore
Assuming the 90 days trading horizon Alior Bank SA is expected to generate 3.22 times more return on investment than Solstad Offshore. However, Alior Bank is 3.22 times more volatile than Solstad Offshore ASA. It trades about 0.03 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about -0.2 per unit of risk. If you would invest 7,950 in Alior Bank SA on November 28, 2024 and sell it today you would earn a total of 0.00 from holding Alior Bank SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alior Bank SA vs. Solstad Offshore ASA
Performance |
| Timeline |
| Alior Bank SA |
| Solstad Offshore ASA |
Alior Bank and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and Solstad Offshore
The main advantage of trading using opposite Alior Bank and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| Alior Bank vs. Check Point Software | Alior Bank vs. Darden Restaurants | Alior Bank vs. Hecla Mining Co | Alior Bank vs. Atalaya Mining |
| Solstad Offshore vs. Silvercorp Metals | Solstad Offshore vs. Wheaton Precious Metals | Solstad Offshore vs. AMG Advanced Metallurgical | Solstad Offshore vs. Norwegian Air Shuttle |
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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