Correlation Between Alior Bank and SOFTWARE MANSION
Can any of the company-specific risk be diversified away by investing in both Alior Bank and SOFTWARE MANSION 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 SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA, you can compare the effects of market volatilities on Alior Bank and SOFTWARE MANSION 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 SOFTWARE MANSION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and SOFTWARE MANSION.
Diversification Opportunities for Alior Bank and SOFTWARE MANSION
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alior and SOFTWARE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and SOFTWARE MANSION SPOLKA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTWARE MANSION SPOLKA 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 SOFTWARE MANSION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTWARE MANSION SPOLKA has no effect on the direction of Alior Bank i.e., Alior Bank and SOFTWARE MANSION go up and down completely randomly.
Pair Corralation between Alior Bank and SOFTWARE MANSION
Assuming the 90 days trading horizon Alior Bank SA is expected to generate 1.3 times more return on investment than SOFTWARE MANSION. However, Alior Bank is 1.3 times more volatile than SOFTWARE MANSION SPOLKA. It trades about 0.06 of its potential returns per unit of risk. SOFTWARE MANSION SPOLKA is currently generating about -0.11 per unit of risk. If you would invest 8,752 in Alior Bank SA on August 29, 2024 and sell it today you would earn a total of 226.00 from holding Alior Bank SA or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alior Bank SA vs. SOFTWARE MANSION SPOLKA
Performance |
| Timeline |
| Alior Bank SA |
| SOFTWARE MANSION SPOLKA |
Alior Bank and SOFTWARE MANSION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and SOFTWARE MANSION
The main advantage of trading using opposite Alior Bank and SOFTWARE MANSION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, SOFTWARE MANSION 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 SOFTWARE MANSION will offset losses from the drop in SOFTWARE MANSION's long position.| Alior Bank vs. SOFTWARE MANSION SPOLKA | Alior Bank vs. Noble Financials SA | Alior Bank vs. Quantum Software SA | Alior Bank vs. Enter Air SA |
| SOFTWARE MANSION vs. Quantum Software SA | SOFTWARE MANSION vs. Creotech Instruments SA | SOFTWARE MANSION vs. New Tech Venture | SOFTWARE MANSION vs. Intersport Polska 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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