Correlation Between Carlson Investments and Alior Bank

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

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

Diversification Opportunities for Carlson Investments and Alior Bank

0.31

Correlation Coefficient

Carlson Investments  Alior Bank

Weak diversification

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

Pair Corralation between Carlson Investments and Alior Bank

Assuming the 90 days trading horizon Carlson Investments SA is expected to under-perform the Alior Bank. In addition to that, Carlson Investments is 1.47 times more volatile than Alior Bank SA. It trades about -0.08 of its total potential returns per unit of risk. Alior Bank SA is currently generating about -0.01 per unit of volatility. If you would invest  9,294  in Alior Bank SA on September 15, 2024 and sell it today you would lose (316.00) from holding Alior Bank SA or give up 3.4% of portfolio value over 90 days.

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

Carlson Investments SA  vs.  Alior Bank SA

Carlson Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlson Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Carlson Investments and Alior Bank

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

The idea behind Carlson Investments SA and Alior Bank 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.