Correlation Between ALIOR BANK and CosmoSteel Holdings

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

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

Diversification Opportunities for ALIOR BANK and CosmoSteel Holdings

0.03

Correlation Coefficient

ALIOR BANK  CosmoSteel Holdings

Significant diversification

The 3 months correlation between ALIOR and CosmoSteel is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ALIOR BANK and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and ALIOR BANK 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 ALIOR BANK are associated (or correlated) with CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of ALIOR BANK i.e., ALIOR BANK and CosmoSteel Holdings go up and down completely randomly.

Pair Corralation between ALIOR BANK and CosmoSteel Holdings

Assuming the 90 days trading horizon ALIOR BANK is expected to under-perform the CosmoSteel Holdings. But the stock apears to be less risky and, when comparing its historical volatility, ALIOR BANK is 1.11 times less risky than CosmoSteel Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The CosmoSteel Holdings Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6.55  in CosmoSteel Holdings Limited on September 22, 2024 and sell it today you would earn a total of  0.65  from holding CosmoSteel Holdings Limited or generate 9.92% return on investment over 90 days.

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

ALIOR BANK  vs.  CosmoSteel Holdings Limited

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.

CosmoSteel Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CosmoSteel Holdings Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CosmoSteel Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALIOR BANK and CosmoSteel Holdings

The main advantage of trading using opposite ALIOR BANK and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALIOR BANK position performs unexpectedly, CosmoSteel Holdings 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 CosmoSteel Holdings will offset losses from the drop in CosmoSteel Holdings' long position.

The idea behind ALIOR BANK and CosmoSteel Holdings Limited 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.