Correlation Between Alior Bank and European Metals
Can any of the company-specific risk be diversified away by investing in both Alior Bank and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Alior Bank and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and European Metals.
Diversification Opportunities for Alior Bank and European Metals
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alior and European is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Alior Bank i.e., Alior Bank and European Metals go up and down completely randomly.
Pair Corralation between Alior Bank and European Metals
Assuming the 90 days trading horizon Alior Bank SA is expected to generate 0.37 times more return on investment than European Metals. However, Alior Bank SA is 2.7 times less risky than European Metals. It trades about 0.01 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.11 per unit of risk. If you would invest 7,946 in Alior Bank SA on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Alior Bank SA or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Alior Bank SA vs. European Metals Holdings
Performance |
| Timeline |
| Alior Bank SA |
| European Metals Holdings |
Alior Bank and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and European Metals
The main advantage of trading using opposite Alior Bank and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Alior Bank vs. Toyota Motor Corp | Alior Bank vs. SoftBank Group Corp | Alior Bank vs. OTP Bank Nyrt | Alior Bank vs. Hershey Co |
| European Metals vs. National Bank of | European Metals vs. Alior Bank SA | European Metals vs. Solstad Offshore ASA | European Metals vs. St Galler Kantonalbank |
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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