Correlation Between SoftBank Group and Alior Bank

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

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

Diversification Opportunities for SoftBank Group and Alior Bank

0.08

Correlation Coefficient

SoftBank Group  Alior Bank

Significant diversification

The 3 months correlation between SoftBank and Alior is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp 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 SoftBank Group 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 SoftBank Group Corp 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 SoftBank Group i.e., SoftBank Group and Alior Bank go up and down completely randomly.

Pair Corralation between SoftBank Group and Alior Bank

Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 0.74 times more return on investment than Alior Bank. However, SoftBank Group Corp is 1.35 times less risky than Alior Bank. It trades about 0.09 of its potential returns per unit of risk. Alior Bank SA is currently generating about 0.02 per unit of risk. If you would invest  847,897  in SoftBank Group Corp on September 12, 2024 and sell it today you would earn a total of  73,403  from holding SoftBank Group Corp or generate 8.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.75%
Values	Daily Returns

SoftBank Group Corp  vs.  Alior Bank SA

SoftBank Group Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SoftBank Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 SoftBank Group and Alior Bank

The main advantage of trading using opposite SoftBank Group and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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 SoftBank Group Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.