Correlation Between Alior Bank and Novita SA
Can any of the company-specific risk be diversified away by investing in both Alior Bank and Novita SA 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 Novita SA 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 Novita SA, you can compare the effects of market volatilities on Alior Bank and Novita SA 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 Novita SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Novita SA.
Diversification Opportunities for Alior Bank and Novita SA
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alior and Novita is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Novita SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novita 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 Novita SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novita SA has no effect on the direction of Alior Bank i.e., Alior Bank and Novita SA go up and down completely randomly.
Pair Corralation between Alior Bank and Novita SA
Assuming the 90 days trading horizon Alior Bank is expected to generate 12.25 times less return on investment than Novita SA. In addition to that, Alior Bank is 1.59 times more volatile than Novita SA. It trades about 0.01 of its total potential returns per unit of risk. Novita SA is currently generating about 0.21 per unit of volatility. If you would invest 11,200 in Novita SA on September 5, 2024 and sell it today you would earn a total of 800.00 from holding Novita SA or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alior Bank SA vs. Novita SA
Performance |
| Timeline |
| Alior Bank SA |
| Novita SA |
Alior Bank and Novita SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and Novita SA
The main advantage of trading using opposite Alior Bank and Novita SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, Novita SA 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 Novita SA will offset losses from the drop in Novita SA's long position.| Alior Bank vs. 3R Games SA | Alior Bank vs. Baked Games SA | Alior Bank vs. Mercator Medical SA | Alior Bank vs. MCI Management SA |
| Novita SA vs. LSI Software SA | Novita SA vs. Alior Bank SA | Novita SA vs. Echo Investment SA | Novita SA vs. UniCredit SpA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |