Correlation Between St Galler and Alior Bank

Can any of the company-specific risk be diversified away by investing in both St Galler 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 St Galler and Alior Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between St Galler Kantonalbank and Alior Bank SA, you can compare the effects of market volatilities on St Galler 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 St Galler with a short position of Alior Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of St Galler and Alior Bank.

Diversification Opportunities for St Galler and Alior Bank

0.29

Correlation Coefficient

St Galler  Alior Bank

Modest diversification

The 3 months correlation between 0QQZ and Alior is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding St Galler Kantonalbank and Alior Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alior Bank SA and St Galler 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 St Galler Kantonalbank 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 SA has no effect on the direction of St Galler i.e., St Galler and Alior Bank go up and down completely randomly.

Pair Corralation between St Galler and Alior Bank

Assuming the 90 days trading horizon St Galler Kantonalbank is expected to generate 0.13 times more return on investment than Alior Bank. However, St Galler Kantonalbank is 7.83 times less risky than Alior Bank. It trades about 0.23 of its potential returns per unit of risk. Alior Bank SA is currently generating about 0.03 per unit of risk. If you would invest  42,000  in St Galler Kantonalbank on September 12, 2024 and sell it today you would earn a total of  1,600  from holding St Galler Kantonalbank or generate 3.81% return on investment over 90 days.

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

St Galler Kantonalbank  vs.  Alior Bank SA

St Galler Kantonalbank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, St Galler may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with St Galler and Alior Bank

The main advantage of trading using opposite St Galler and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if St Galler 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.

The idea behind St Galler Kantonalbank and Alior Bank SA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.