Correlation Between SOFTWARE MANSION and Alior Bank
Can any of the company-specific risk be diversified away by investing in both SOFTWARE MANSION 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 SOFTWARE MANSION and Alior Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOFTWARE MANSION SPOLKA and Alior Bank SA, you can compare the effects of market volatilities on SOFTWARE MANSION 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 SOFTWARE MANSION with a short position of Alior Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFTWARE MANSION and Alior Bank.
Diversification Opportunities for SOFTWARE MANSION and Alior Bank
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SOFTWARE and Alior is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA 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 SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA 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 SOFTWARE MANSION i.e., SOFTWARE MANSION and Alior Bank go up and down completely randomly.
Pair Corralation between SOFTWARE MANSION and Alior Bank
Assuming the 90 days trading horizon SOFTWARE MANSION SPOLKA is expected to under-perform the Alior Bank. But the stock apears to be less risky and, when comparing its historical volatility, SOFTWARE MANSION SPOLKA is 1.3 times less risky than Alior Bank. The stock trades about -0.11 of its potential returns per unit of risk. The Alior Bank SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 |
SOFTWARE MANSION SPOLKA vs. Alior Bank SA
Performance |
| Timeline |
| SOFTWARE MANSION SPOLKA |
| Alior Bank SA |
SOFTWARE MANSION and Alior Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOFTWARE MANSION and Alior Bank
The main advantage of trading using opposite SOFTWARE MANSION and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOFTWARE MANSION 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.| SOFTWARE MANSION vs. Quantum Software SA | SOFTWARE MANSION vs. Creotech Instruments SA | SOFTWARE MANSION vs. New Tech Venture | SOFTWARE MANSION vs. Intersport Polska SA |
| Alior Bank vs. SOFTWARE MANSION SPOLKA | Alior Bank vs. Noble Financials SA | Alior Bank vs. Quantum Software SA | Alior Bank vs. Enter Air 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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