Correlation Between Alior Bank and PMPG Polskie

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

Diversification Opportunities for Alior Bank and PMPG Polskie

-0.37

Correlation Coefficient

Alior Bank  PMPG Polskie

Very good diversification

The 3 months correlation between Alior and PMPG is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and PMPG Polskie Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PMPG Polskie Media 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 PMPG Polskie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PMPG Polskie Media has no effect on the direction of Alior Bank i.e., Alior Bank and PMPG Polskie go up and down completely randomly.

Pair Corralation between Alior Bank and PMPG Polskie

Assuming the 90 days trading horizon Alior Bank SA is expected to generate 0.94 times more return on investment than PMPG Polskie. However, Alior Bank SA is 1.06 times less risky than PMPG Polskie. It trades about 0.17 of its potential returns per unit of risk. PMPG Polskie Media is currently generating about 0.04 per unit of risk. If you would invest  8,724  in Alior Bank SA on December 21, 2024 and sell it today you would earn a total of  2,066  from holding Alior Bank SA or generate 23.68% return on investment over 90 days.

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

Alior Bank SA  vs.  PMPG Polskie Media

Alior Bank SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alior Bank SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Alior Bank reported solid returns over the last few months and may actually be approaching a breakup point.

PMPG Polskie Media

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PMPG Polskie Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, PMPG Polskie may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alior Bank and PMPG Polskie

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

The idea behind Alior Bank SA and PMPG Polskie Media 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.