Correlation Between Alior Bank and Eco5tech

Can any of the company-specific risk be diversified away by investing in both Alior Bank and Eco5tech 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 Eco5tech 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 eco5tech SA, you can compare the effects of market volatilities on Alior Bank and Eco5tech 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 Eco5tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Eco5tech.

Diversification Opportunities for Alior Bank and Eco5tech

-0.11

Correlation Coefficient

Alior Bank  Eco5tech

Good diversification

The 3 months correlation between Alior and Eco5tech is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and eco5tech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eco5tech 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 Eco5tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eco5tech SA has no effect on the direction of Alior Bank i.e., Alior Bank and Eco5tech go up and down completely randomly.

Pair Corralation between Alior Bank and Eco5tech

Assuming the 90 days trading horizon Alior Bank SA is expected to under-perform the Eco5tech. But the stock apears to be less risky and, when comparing its historical volatility, Alior Bank SA is 4.67 times less risky than Eco5tech. The stock trades about -0.04 of its potential returns per unit of risk. The eco5tech SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  103.00  in eco5tech SA on October 26, 2024 and sell it today you would earn a total of  18.00  from holding eco5tech SA or generate 17.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.11%
Values	Daily Returns

Alior Bank SA  vs.  eco5tech SA

Alior Bank SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alior Bank SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

eco5tech SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in eco5tech SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Eco5tech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alior Bank and Eco5tech

The main advantage of trading using opposite Alior Bank and Eco5tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, Eco5tech 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 Eco5tech will offset losses from the drop in Eco5tech's long position.

The idea behind Alior Bank SA and eco5tech 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.