Correlation Between FIREWEED METALS and ALIOR BANK

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

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

Diversification Opportunities for FIREWEED METALS and ALIOR BANK

0.12

Correlation Coefficient

FIREWEED METALS  ALIOR BANK

Average diversification

The 3 months correlation between FIREWEED and ALIOR is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding FIREWEED METALS P and ALIOR BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIOR BANK and FIREWEED METALS 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 FIREWEED METALS P 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 FIREWEED METALS i.e., FIREWEED METALS and ALIOR BANK go up and down completely randomly.

Pair Corralation between FIREWEED METALS and ALIOR BANK

Assuming the 90 days horizon FIREWEED METALS P is expected to generate 1.23 times more return on investment than ALIOR BANK. However, FIREWEED METALS is 1.23 times more volatile than ALIOR BANK. It trades about 0.03 of its potential returns per unit of risk. ALIOR BANK is currently generating about -0.04 per unit of risk. If you would invest  100.00  in FIREWEED METALS P on October 11, 2024 and sell it today you would earn a total of  2.00  from holding FIREWEED METALS P or generate 2.0% return on investment over 90 days.

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

FIREWEED METALS P  vs.  ALIOR BANK

FIREWEED METALS P

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIREWEED METALS P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FIREWEED METALS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ALIOR BANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALIOR BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ALIOR BANK is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FIREWEED METALS and ALIOR BANK

The main advantage of trading using opposite FIREWEED METALS and ALIOR BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIREWEED METALS 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 FIREWEED METALS P 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.