Correlation Between Alior Bank and Addtech

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

Diversification Opportunities for Alior Bank and Addtech

0.35

Correlation Coefficient

Alior Bank  Addtech

Weak diversification

The 3 months correlation between Alior and Addtech is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Addtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech 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 Addtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech has no effect on the direction of Alior Bank i.e., Alior Bank and Addtech go up and down completely randomly.

Pair Corralation between Alior Bank and Addtech

Assuming the 90 days trading horizon Alior Bank is expected to generate 10.87 times less return on investment than Addtech. But when comparing it to its historical volatility, Alior Bank SA is 1.31 times less risky than Addtech. It trades about 0.01 of its potential returns per unit of risk. Addtech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17,630  in Addtech on October 5, 2024 and sell it today you would earn a total of  12,790  from holding Addtech or generate 72.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

Alior Bank SA  vs.  Addtech

Alior Bank SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alior Bank SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Addtech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Addtech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Addtech is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alior Bank and Addtech

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

The idea behind Alior Bank SA and Addtech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.