Correlation Between Medicofarma Biotech and Alior Bank
Can any of the company-specific risk be diversified away by investing in both Medicofarma Biotech and Alior Bank 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 Medicofarma Biotech and Alior Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medicofarma Biotech SA and Alior Bank SA, you can compare the effects of market volatilities on Medicofarma Biotech and Alior Bank 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 Medicofarma Biotech with a short position of Alior Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicofarma Biotech and Alior Bank.
Diversification Opportunities for Medicofarma Biotech and Alior Bank
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Medicofarma and Alior is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Medicofarma Biotech SA and Alior Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alior Bank SA and Medicofarma Biotech 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 Medicofarma Biotech SA are associated (or correlated) with Alior Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alior Bank SA has no effect on the direction of Medicofarma Biotech i.e., Medicofarma Biotech and Alior Bank go up and down completely randomly.
Pair Corralation between Medicofarma Biotech and Alior Bank
Assuming the 90 days trading horizon Medicofarma Biotech SA is expected to under-perform the Alior Bank. In addition to that, Medicofarma Biotech is 2.01 times more volatile than Alior Bank SA. It trades about -0.08 of its total potential returns per unit of risk. Alior Bank SA is currently generating about 0.04 per unit of volatility. If you would invest 7,480 in Alior Bank SA on September 14, 2024 and sell it today you would earn a total of 1,420 from holding Alior Bank SA or generate 18.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Medicofarma Biotech SA vs. Alior Bank SA
Performance |
| Timeline |
| Medicofarma Biotech |
| Alior Bank SA |
Medicofarma Biotech and Alior Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicofarma Biotech and Alior Bank
The main advantage of trading using opposite Medicofarma Biotech and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicofarma Biotech position performs unexpectedly, Alior Bank 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 Alior Bank will offset losses from the drop in Alior Bank's long position.| Medicofarma Biotech vs. Clean Carbon Energy | Medicofarma Biotech vs. ADX | Medicofarma Biotech vs. Agroliga Group PLC | Medicofarma Biotech vs. Vee SA |
| Alior Bank vs. Banco Santander SA | Alior Bank vs. Asseco Business Solutions | Alior Bank vs. Asseco South Eastern | Alior Bank vs. HM Inwest 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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