Correlation Between Eco5tech and Alior Bank

Can any of the company-specific risk be diversified away by investing in both Eco5tech 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 Eco5tech and Alior Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between eco5tech SA and Alior Bank SA, you can compare the effects of market volatilities on Eco5tech 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 Eco5tech with a short position of Alior Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco5tech and Alior Bank.

Diversification Opportunities for Eco5tech and Alior Bank

0.7

Correlation Coefficient

Eco5tech  Alior Bank

Poor diversification

The 3 months correlation between Eco5tech and Alior is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding eco5tech 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 Eco5tech 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 eco5tech 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 Eco5tech i.e., Eco5tech and Alior Bank go up and down completely randomly.

Pair Corralation between Eco5tech and Alior Bank

Assuming the 90 days trading horizon eco5tech SA is expected to generate 3.46 times more return on investment than Alior Bank. However, Eco5tech is 3.46 times more volatile than Alior Bank SA. It trades about 0.15 of its potential returns per unit of risk. Alior Bank SA is currently generating about 0.17 per unit of risk. If you would invest  105.00  in eco5tech SA on December 22, 2024 and sell it today you would earn a total of  63.00  from holding eco5tech SA or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.22%
Values	Daily Returns

eco5tech SA  vs.  Alior Bank SA

eco5tech SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in eco5tech SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Eco5tech reported solid returns over the last few months and may actually be approaching a breakup point.

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 12 (%) 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.

Pair Trading with Eco5tech and Alior Bank

The main advantage of trading using opposite Eco5tech and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco5tech 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 eco5tech 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.