Correlation Between Alior Bank and AfriTin Mining

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

Diversification Opportunities for Alior Bank and AfriTin Mining

0.24

Correlation Coefficient

Alior Bank  AfriTin Mining

Modest diversification

The 3 months correlation between Alior and AfriTin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and AfriTin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfriTin Mining 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 AfriTin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfriTin Mining has no effect on the direction of Alior Bank i.e., Alior Bank and AfriTin Mining go up and down completely randomly.

Pair Corralation between Alior Bank and AfriTin Mining

Assuming the 90 days trading horizon Alior Bank SA is expected to generate 1.61 times more return on investment than AfriTin Mining. However, Alior Bank is 1.61 times more volatile than AfriTin Mining. It trades about -0.03 of its potential returns per unit of risk. AfriTin Mining is currently generating about -0.18 per unit of risk. If you would invest  9,137  in Alior Bank SA on December 2, 2024 and sell it today you would lose (1,187) from holding Alior Bank SA or give up 12.99% of portfolio value over 90 days.

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

Alior Bank SA  vs.  AfriTin Mining

Alior Bank SA

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AfriTin Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days AfriTin Mining 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alior Bank and AfriTin Mining

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

The idea behind Alior Bank SA and AfriTin Mining 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.