Correlation Between Alior Bank and AES Corp
Can any of the company-specific risk be diversified away by investing in both Alior Bank and AES Corp 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 AES Corp 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 AES Corp, you can compare the effects of market volatilities on Alior Bank and AES Corp 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 AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and AES Corp.
Diversification Opportunities for Alior Bank and AES Corp
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alior and AES is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp 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 AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp has no effect on the direction of Alior Bank i.e., Alior Bank and AES Corp go up and down completely randomly.
Pair Corralation between Alior Bank and AES Corp
Assuming the 90 days trading horizon Alior Bank SA is expected to generate 2.7 times more return on investment than AES Corp. However, Alior Bank is 2.7 times more volatile than AES Corp. It trades about 0.03 of its potential returns per unit of risk. AES Corp is currently generating about 0.03 per unit of risk. If you would invest 7,950 in Alior Bank SA on September 13, 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. AES Corp
Performance |
| Timeline |
| Alior Bank SA |
| AES Corp |
Alior Bank and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and AES Corp
The main advantage of trading using opposite Alior Bank and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.| Alior Bank vs. Planet Fitness Cl | Alior Bank vs. Concurrent Technologies Plc | Alior Bank vs. Bellevue Healthcare Trust | Alior Bank vs. Spire Healthcare Group |
| AES Corp vs. Park Hotels Resorts | AES Corp vs. Scandinavian Tobacco Group | AES Corp vs. Melia Hotels | AES Corp vs. Lowland Investment Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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