Correlation Between Alior Bank and Inter Cars

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

By analyzing existing cross correlation between Alior Bank SA and Inter Cars SA, you can compare the effects of market volatilities on Alior Bank and Inter Cars 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 Inter Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Inter Cars.

Diversification Opportunities for Alior Bank and Inter Cars

0.35

Correlation Coefficient

Alior Bank  Inter Cars

Weak diversification

The 3 months correlation between Alior and Inter is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Inter Cars SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Cars SA 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 SA are associated (or correlated) with Inter Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Cars SA has no effect on the direction of Alior Bank i.e., Alior Bank and Inter Cars go up and down completely randomly.

Pair Corralation between Alior Bank and Inter Cars

Assuming the 90 days trading horizon Alior Bank SA is expected to under-perform the Inter Cars. In addition to that, Alior Bank is 1.28 times more volatile than Inter Cars SA. It trades about -0.01 of its total potential returns per unit of risk. Inter Cars SA is currently generating about 0.02 per unit of volatility. If you would invest  51,000  in Inter Cars SA on September 17, 2024 and sell it today you would earn a total of  800.00  from holding Inter Cars SA or generate 1.57% return on investment over 90 days.

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

Alior Bank SA  vs.  Inter Cars SA

Alior Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alior Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Alior Bank is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Inter Cars SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Cars SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Inter Cars is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Alior Bank and Inter Cars

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

The idea behind Alior Bank SA and Inter Cars 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..