Correlation Between CPU SOFTWAREHOUSE and ALIOR BANK

Can any of the company-specific risk be diversified away by investing in both CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE and ALIOR BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CPU SOFTWAREHOUSE and ALIOR BANK, you can compare the effects of market volatilities on CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE with a short position of ALIOR BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPU SOFTWAREHOUSE and ALIOR BANK.

Diversification Opportunities for CPU SOFTWAREHOUSE and ALIOR BANK

0.44

Correlation Coefficient

CPU SOFTWAREHOUSE  ALIOR BANK

Very weak diversification

The 3 months correlation between CPU and ALIOR is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CPU SOFTWAREHOUSE and ALIOR BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIOR BANK and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE 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 has no effect on the direction of CPU SOFTWAREHOUSE i.e., CPU SOFTWAREHOUSE and ALIOR BANK go up and down completely randomly.

Pair Corralation between CPU SOFTWAREHOUSE and ALIOR BANK

Assuming the 90 days trading horizon CPU SOFTWAREHOUSE is expected to generate 5.35 times more return on investment than ALIOR BANK. However, CPU SOFTWAREHOUSE is 5.35 times more volatile than ALIOR BANK. It trades about 0.09 of its potential returns per unit of risk. ALIOR BANK is currently generating about 0.19 per unit of risk. If you would invest  94.00  in CPU SOFTWAREHOUSE on December 3, 2024 and sell it today you would earn a total of  21.00  from holding CPU SOFTWAREHOUSE or generate 22.34% return on investment over 90 days.

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

CPU SOFTWAREHOUSE  vs.  ALIOR BANK

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CPU SOFTWAREHOUSE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, CPU SOFTWAREHOUSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

ALIOR BANK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALIOR BANK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ALIOR BANK may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CPU SOFTWAREHOUSE and ALIOR BANK

The main advantage of trading using opposite CPU SOFTWAREHOUSE and ALIOR BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE and ALIOR BANK 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.