Correlation Between Alior Bank and Live Motion

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

Diversification Opportunities for Alior Bank and Live Motion

0.1

Correlation Coefficient

Alior Bank  Live Motion

Average diversification

The 3 months correlation between Alior and Live is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Live Motion Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Motion Games 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 Live Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Motion Games has no effect on the direction of Alior Bank i.e., Alior Bank and Live Motion go up and down completely randomly.

Pair Corralation between Alior Bank and Live Motion

Assuming the 90 days trading horizon Alior Bank SA is expected to generate 1.4 times more return on investment than Live Motion. However, Alior Bank is 1.4 times more volatile than Live Motion Games. It trades about 0.11 of its potential returns per unit of risk. Live Motion Games is currently generating about 0.01 per unit of risk. If you would invest  9,208  in Alior Bank SA on December 4, 2024 and sell it today you would earn a total of  392.00  from holding Alior Bank SA or generate 4.26% return on investment over 90 days.

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

Alior Bank SA  vs.  Live Motion Games

Alior Bank SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alior Bank SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Alior Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Live Motion Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Motion Games has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Live Motion 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 Live Motion

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

The idea behind Alior Bank SA and Live Motion Games 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..