Correlation Between INTER CARS and ALIOR BANK

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

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

Diversification Opportunities for INTER CARS and ALIOR BANK

0.39

Correlation Coefficient

INTER CARS  ALIOR BANK

Weak diversification

The 3 months correlation between INTER and ALIOR is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and ALIOR BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIOR BANK and INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and ALIOR BANK go up and down completely randomly.

Pair Corralation between INTER CARS and ALIOR BANK

Assuming the 90 days horizon INTER CARS SA is expected to generate 0.8 times more return on investment than ALIOR BANK. However, INTER CARS SA is 1.25 times less risky than ALIOR BANK. It trades about 0.03 of its potential returns per unit of risk. ALIOR BANK is currently generating about -0.02 per unit of risk. If you would invest  11,520  in INTER CARS SA on September 22, 2024 and sell it today you would earn a total of  360.00  from holding INTER CARS SA or generate 3.13% return on investment over 90 days.

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

INTER CARS SA  vs.  ALIOR BANK

INTER CARS SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTER CARS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 rather sound basic indicators, ALIOR BANK is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with INTER CARS and ALIOR BANK

The main advantage of trading using opposite INTER CARS and ALIOR BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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 INTER CARS SA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.