Correlation Between Alior Bank and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Alior Bank and STMicroelectronics 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 STMicroelectronics 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 STMicroelectronics NV, you can compare the effects of market volatilities on Alior Bank and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and STMicroelectronics.
Diversification Opportunities for Alior Bank and STMicroelectronics
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alior and STMicroelectronics is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Alior Bank i.e., Alior Bank and STMicroelectronics go up and down completely randomly.
Pair Corralation between Alior Bank and STMicroelectronics
Assuming the 90 days trading horizon Alior Bank SA is expected to generate 1.88 times more return on investment than STMicroelectronics. However, Alior Bank is 1.88 times more volatile than STMicroelectronics NV. It trades about 0.02 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.04 per unit of risk. If you would invest 7,950 in Alior Bank SA on September 1, 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. STMicroelectronics NV
Performance |
| Timeline |
| Alior Bank SA |
| STMicroelectronics |
Alior Bank and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and STMicroelectronics
The main advantage of trading using opposite Alior Bank and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Alior Bank vs. STMicroelectronics NV | Alior Bank vs. MoneysupermarketCom Group PLC | Alior Bank vs. DFS Furniture PLC | Alior Bank vs. Southwest Airlines Co |
| STMicroelectronics vs. Zoom Video Communications | STMicroelectronics vs. Tyson Foods Cl | STMicroelectronics vs. Fevertree Drinks Plc | STMicroelectronics vs. Aeorema Communications Plc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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