Correlation Between ING Bank and Alta SA
Can any of the company-specific risk be diversified away by investing in both ING Bank and Alta 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 ING Bank and Alta SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Bank lski and Alta SA, you can compare the effects of market volatilities on ING Bank and Alta 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 ING Bank with a short position of Alta SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Bank and Alta SA.
Diversification Opportunities for ING Bank and Alta SA
Very weak diversification
The 3 months correlation between ING and Alta is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski and Alta SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta SA and ING 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 ING Bank lski are associated (or correlated) with Alta SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta SA has no effect on the direction of ING Bank i.e., ING Bank and Alta SA go up and down completely randomly.
Pair Corralation between ING Bank and Alta SA
Assuming the 90 days trading horizon ING Bank is expected to generate 14.21 times less return on investment than Alta SA. But when comparing it to its historical volatility, ING Bank lski is 2.12 times less risky than Alta SA. It trades about 0.01 of its potential returns per unit of risk. Alta SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 154.00 in Alta SA on September 2, 2024 and sell it today you would earn a total of 81.00 from holding Alta SA or generate 52.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Bank lski vs. Alta SA
Performance |
| Timeline |
| ING Bank lski |
| Alta SA |
ING Bank and Alta SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Bank and Alta SA
The main advantage of trading using opposite ING Bank and Alta SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Bank position performs unexpectedly, Alta 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 Alta SA will offset losses from the drop in Alta SA's long position.| ING Bank vs. SOFTWARE MANSION SPOLKA | ING Bank vs. Carlson Investments SA | ING Bank vs. Road Studio SA | ING Bank vs. Echo Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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