Correlation Between Alior Bank and Dom Development
Can any of the company-specific risk be diversified away by investing in both Alior Bank and Dom Development 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 Dom Development 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 Dom Development SA, you can compare the effects of market volatilities on Alior Bank and Dom Development 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 Dom Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Dom Development.
Diversification Opportunities for Alior Bank and Dom Development
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alior and Dom is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Dom Development SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dom Development SA 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 Dom Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dom Development SA has no effect on the direction of Alior Bank i.e., Alior Bank and Dom Development go up and down completely randomly.
Pair Corralation between Alior Bank and Dom Development
Assuming the 90 days trading horizon Alior Bank SA is expected to generate 1.4 times more return on investment than Dom Development. However, Alior Bank is 1.4 times more volatile than Dom Development SA. It trades about 0.12 of its potential returns per unit of risk. Dom Development SA is currently generating about 0.05 per unit of risk. If you would invest 8,752 in Alior Bank SA on August 28, 2024 and sell it today you would earn a total of 518.00 from holding Alior Bank SA or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alior Bank SA vs. Dom Development SA
Performance |
| Timeline |
| Alior Bank SA |
| Dom Development SA |
Alior Bank and Dom Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and Dom Development
The main advantage of trading using opposite Alior Bank and Dom Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, Dom Development 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 Dom Development will offset losses from the drop in Dom Development's long position.| Alior Bank vs. New Tech Venture | Alior Bank vs. Igoria Trade SA | Alior Bank vs. PLAYWAY SA | Alior Bank vs. Creotech Instruments SA |
| Dom Development vs. PZ Cormay SA | Dom Development vs. Enter Air SA | Dom Development vs. 3R Games SA | Dom Development vs. Gaming Factory SA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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