Correlation Between ALIOR BANK and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both ALIOR BANK and HSBC Holdings 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 HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALIOR BANK and HSBC Holdings plc, you can compare the effects of market volatilities on ALIOR BANK and HSBC Holdings 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 HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALIOR BANK and HSBC Holdings.
Diversification Opportunities for ALIOR BANK and HSBC Holdings
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALIOR and HSBC is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ALIOR BANK and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc 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 are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of ALIOR BANK i.e., ALIOR BANK and HSBC Holdings go up and down completely randomly.
Pair Corralation between ALIOR BANK and HSBC Holdings
Assuming the 90 days trading horizon ALIOR BANK is expected to generate 1.5 times more return on investment than HSBC Holdings. However, ALIOR BANK is 1.5 times more volatile than HSBC Holdings plc. It trades about 0.11 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.08 per unit of risk. If you would invest 576.00 in ALIOR BANK on September 12, 2024 and sell it today you would earn a total of 1,475 from holding ALIOR BANK or generate 256.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALIOR BANK vs. HSBC Holdings plc
Performance |
| Timeline |
| ALIOR BANK |
| HSBC Holdings plc |
ALIOR BANK and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALIOR BANK and HSBC Holdings
The main advantage of trading using opposite ALIOR BANK and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALIOR BANK position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.The idea behind ALIOR BANK and HSBC Holdings plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HSBC Holdings vs. SOUTHWEST AIRLINES | HSBC Holdings vs. Nok Airlines PCL | HSBC Holdings vs. Regions Financial | HSBC Holdings vs. ALIOR BANK |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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