Correlation Between Alior Bank and Liberty Media

Can any of the company-specific risk be diversified away by investing in both Alior Bank and Liberty Media 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 Liberty Media 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 Liberty Media Corp, you can compare the effects of market volatilities on Alior Bank and Liberty Media 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Liberty Media.

Diversification Opportunities for Alior Bank and Liberty Media

0.37

Correlation Coefficient

Alior Bank  Liberty Media

Weak diversification

The 3 months correlation between Alior and Liberty is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of Alior Bank i.e., Alior Bank and Liberty Media go up and down completely randomly.

Pair Corralation between Alior Bank and Liberty Media

Assuming the 90 days trading horizon Alior Bank is expected to generate 7.71 times less return on investment than Liberty Media. In addition to that, Alior Bank is 1.71 times more volatile than Liberty Media Corp. It trades about 0.01 of its total potential returns per unit of risk. Liberty Media Corp is currently generating about 0.15 per unit of volatility. If you would invest  7,055  in Liberty Media Corp on September 4, 2024 and sell it today you would earn a total of  1,041  from holding Liberty Media Corp or generate 14.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Alior Bank SA  vs.  Liberty Media Corp

Alior Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alior Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alior Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Liberty Media Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Liberty Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alior Bank and Liberty Media

The main advantage of trading using opposite Alior Bank and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media's long position.

The idea behind Alior Bank SA and Liberty Media Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.