Correlation Between CHINA EAST and ALIOR BANK
Can any of the company-specific risk be diversified away by investing in both CHINA EAST 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 CHINA EAST and ALIOR BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EAST ED and ALIOR BANK, you can compare the effects of market volatilities on CHINA EAST 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 CHINA EAST with a short position of ALIOR BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EAST and ALIOR BANK.
Diversification Opportunities for CHINA EAST and ALIOR BANK
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and ALIOR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EAST ED and ALIOR BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIOR BANK and CHINA EAST 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 CHINA EAST ED 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 has no effect on the direction of CHINA EAST i.e., CHINA EAST and ALIOR BANK go up and down completely randomly.
Pair Corralation between CHINA EAST and ALIOR BANK
Assuming the 90 days horizon CHINA EAST ED is expected to under-perform the ALIOR BANK. In addition to that, CHINA EAST is 1.42 times more volatile than ALIOR BANK. It trades about -0.15 of its total potential returns per unit of risk. ALIOR BANK is currently generating about -0.1 per unit of volatility. If you would invest 2,069 in ALIOR BANK on September 29, 2024 and sell it today you would lose (56.00) from holding ALIOR BANK or give up 2.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EAST ED vs. ALIOR BANK
Performance |
| Timeline |
| CHINA EAST ED |
| ALIOR BANK |
CHINA EAST and ALIOR BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EAST and ALIOR BANK
The main advantage of trading using opposite CHINA EAST and ALIOR BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EAST 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.| CHINA EAST vs. ALIOR BANK | CHINA EAST vs. Ameriprise Financial | CHINA EAST vs. Chiba Bank | CHINA EAST vs. QBE Insurance Group |
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 CEOs Directory module to screen CEOs from public companies around the world.
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