Correlation Between Alior Bank and PLAYWAY SA

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

Diversification Opportunities for Alior Bank and PLAYWAY SA

0.31

Correlation Coefficient

Alior Bank  PLAYWAY SA

Weak diversification

The 3 months correlation between Alior and PLAYWAY is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and PLAYWAY SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWAY 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 PLAYWAY SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYWAY SA has no effect on the direction of Alior Bank i.e., Alior Bank and PLAYWAY SA go up and down completely randomly.

Pair Corralation between Alior Bank and PLAYWAY SA

Assuming the 90 days trading horizon Alior Bank SA is expected to under-perform the PLAYWAY SA. In addition to that, Alior Bank is 1.6 times more volatile than PLAYWAY SA. It trades about -0.02 of its total potential returns per unit of risk. PLAYWAY SA is currently generating about 0.03 per unit of volatility. If you would invest  28,000  in PLAYWAY SA on October 9, 2024 and sell it today you would earn a total of  600.00  from holding PLAYWAY SA or generate 2.14% 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.  PLAYWAY 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.

PLAYWAY SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYWAY SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PLAYWAY SA 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 PLAYWAY SA

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

The idea behind Alior Bank SA and PLAYWAY 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..