Correlation Between Alior Bank and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both Alior Bank and UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA, you can compare the effects of market volatilities on Alior Bank and UniCredit SpA 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 UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and UniCredit SpA.
Diversification Opportunities for Alior Bank and UniCredit SpA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alior and UniCredit is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of Alior Bank i.e., Alior Bank and UniCredit SpA go up and down completely randomly.
Pair Corralation between Alior Bank and UniCredit SpA
Assuming the 90 days trading horizon Alior Bank SA is expected to under-perform the UniCredit SpA. But the stock apears to be less risky and, when comparing its historical volatility, Alior Bank SA is 1.04 times less risky than UniCredit SpA. The stock trades about -0.01 of its potential returns per unit of risk. The UniCredit SpA is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 15,588 in UniCredit SpA on October 25, 2024 and sell it today you would earn a total of 2,492 from holding UniCredit SpA or generate 15.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alior Bank SA vs. UniCredit SpA
Performance |
| Timeline |
| Alior Bank SA |
| UniCredit SpA |
Alior Bank and UniCredit SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and UniCredit SpA
The main advantage of trading using opposite Alior Bank and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.| Alior Bank vs. Mlk Foods Public | Alior Bank vs. Immobile | Alior Bank vs. Santander Bank Polska | Alior Bank vs. GreenX Metals |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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