Correlation Between X FAB and Alior Bank
Can any of the company-specific risk be diversified away by investing in both X FAB and Alior Bank 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 X FAB and Alior Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Alior Bank SA, you can compare the effects of market volatilities on X FAB and Alior Bank 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 X FAB with a short position of Alior Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Alior Bank.
Diversification Opportunities for X FAB and Alior Bank
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0ROZ and Alior is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Alior Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alior Bank SA and X FAB 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 X FAB Silicon Foundries are associated (or correlated) with Alior Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alior Bank SA has no effect on the direction of X FAB i.e., X FAB and Alior Bank go up and down completely randomly.
Pair Corralation between X FAB and Alior Bank
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 0.52 times more return on investment than Alior Bank. However, X FAB Silicon Foundries is 1.92 times less risky than Alior Bank. It trades about 0.04 of its potential returns per unit of risk. Alior Bank SA is currently generating about 0.02 per unit of risk. If you would invest 429.00 in X FAB Silicon Foundries on September 2, 2024 and sell it today you would earn a total of 7.00 from holding X FAB Silicon Foundries or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Alior Bank SA
Performance |
| Timeline |
| X FAB Silicon |
| Alior Bank SA |
X FAB and Alior Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Alior Bank
The main advantage of trading using opposite X FAB and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Alior Bank 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 Alior Bank will offset losses from the drop in Alior Bank's long position.| X FAB vs. Uniper SE | X FAB vs. Mulberry Group PLC | X FAB vs. London Security Plc | X FAB vs. Triad Group PLC |
| Alior Bank vs. Toyota Motor Corp | Alior Bank vs. OTP Bank Nyrt | Alior Bank vs. Las Vegas Sands | Alior Bank vs. Yum Brands |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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