Correlation Between Catena Media and Alior Bank

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

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

Diversification Opportunities for Catena Media and Alior Bank

-0.03

Correlation Coefficient

Catena Media  Alior Bank

Good diversification

The 3 months correlation between Catena and Alior is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Catena Media PLC 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 Catena Media 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 Catena Media PLC 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 Catena Media i.e., Catena Media and Alior Bank go up and down completely randomly.

Pair Corralation between Catena Media and Alior Bank

Assuming the 90 days trading horizon Catena Media PLC is expected to under-perform the Alior Bank. But the stock apears to be less risky and, when comparing its historical volatility, Catena Media PLC is 1.12 times less risky than Alior Bank. The stock trades about -0.14 of its potential returns per unit of risk. The Alior Bank SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Catena Media PLC  vs.  Alior Bank SA

Catena Media PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catena Media PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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.

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.

Pair Trading with Catena Media and Alior Bank

The main advantage of trading using opposite Catena Media and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena Media 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 Catena Media PLC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.