Correlation Between Alior Bank and X FAB

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

Diversification Opportunities for Alior Bank and X FAB

0.03

Correlation Coefficient

Alior Bank  X FAB

Significant diversification

The 3 months correlation between Alior and 0ROZ is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Alior Bank i.e., Alior Bank and X FAB go up and down completely randomly.

Pair Corralation between Alior Bank and X FAB

Assuming the 90 days trading horizon Alior Bank SA is expected to generate 1.85 times more return on investment than X FAB. However, Alior Bank is 1.85 times more volatile than X FAB Silicon Foundries. It trades about 0.02 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.14 per unit of risk. If you would invest  7,950  in Alior Bank SA on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Alior Bank SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alior Bank SA  vs.  X FAB Silicon Foundries

Alior Bank SA

Risk-Adjusted Performance

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 uncertain basic indicators, Alior Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

X FAB Silicon

Risk-Adjusted Performance

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alior Bank and X FAB

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

The idea behind Alior Bank SA and X FAB Silicon Foundries 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.