Correlation Between ALIOR BANK and CHINA EAST
Can any of the company-specific risk be diversified away by investing in both ALIOR BANK and CHINA EAST 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 CHINA EAST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALIOR BANK and CHINA EAST ED, you can compare the effects of market volatilities on ALIOR BANK and CHINA EAST 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 CHINA EAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALIOR BANK and CHINA EAST.
Diversification Opportunities for ALIOR BANK and CHINA EAST
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALIOR and CHINA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ALIOR BANK and CHINA EAST ED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EAST ED 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 CHINA EAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EAST ED has no effect on the direction of ALIOR BANK i.e., ALIOR BANK and CHINA EAST go up and down completely randomly.
Pair Corralation between ALIOR BANK and CHINA EAST
Assuming the 90 days trading horizon ALIOR BANK is expected to generate 0.48 times more return on investment than CHINA EAST. However, ALIOR BANK is 2.09 times less risky than CHINA EAST. It trades about 0.1 of its potential returns per unit of risk. CHINA EAST ED is currently generating about 0.01 per unit of risk. If you would invest 709.00 in ALIOR BANK on September 29, 2024 and sell it today you would earn a total of 1,304 from holding ALIOR BANK or generate 183.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ALIOR BANK vs. CHINA EAST ED
Performance |
| Timeline |
| ALIOR BANK |
| CHINA EAST ED |
ALIOR BANK and CHINA EAST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALIOR BANK and CHINA EAST
The main advantage of trading using opposite ALIOR BANK and CHINA EAST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALIOR BANK position performs unexpectedly, CHINA EAST 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 CHINA EAST will offset losses from the drop in CHINA EAST's long position.The idea behind ALIOR BANK and CHINA EAST ED 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.| CHINA EAST vs. Warner Music Group | CHINA EAST vs. LEGACY IRON ORE | CHINA EAST vs. Khiron Life Sciences | CHINA EAST vs. UNIVERSAL MUSIC GROUP |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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