Correlation Between WIMFARM SA and ALIOR BANK

Can any of the company-specific risk be diversified away by investing in both WIMFARM SA 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 WIMFARM SA and ALIOR BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WIMFARM SA EO and ALIOR BANK, you can compare the effects of market volatilities on WIMFARM SA 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 WIMFARM SA with a short position of ALIOR BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and ALIOR BANK.

Diversification Opportunities for WIMFARM SA and ALIOR BANK

0.29

Correlation Coefficient

WIMFARM SA  ALIOR BANK

Modest diversification

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

Pair Corralation between WIMFARM SA and ALIOR BANK

Assuming the 90 days horizon WIMFARM SA EO is expected to under-perform the ALIOR BANK. In addition to that, WIMFARM SA is 1.37 times more volatile than ALIOR BANK. It trades about -0.06 of its total potential returns per unit of risk. ALIOR BANK is currently generating about 0.11 per unit of volatility. If you would invest  578.00  in ALIOR BANK on September 20, 2024 and sell it today you would earn a total of  1,462  from holding ALIOR BANK or generate 252.94% return on investment over 90 days.

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

WIMFARM SA EO  vs.  ALIOR BANK

WIMFARM SA EO

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ALIOR BANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALIOR BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with WIMFARM SA and ALIOR BANK

The main advantage of trading using opposite WIMFARM SA and ALIOR BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIMFARM SA 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 WIMFARM SA EO and ALIOR BANK 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.