Correlation Between UF Games and Alior Bank

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

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

Diversification Opportunities for UF Games and Alior Bank

0.18

Correlation Coefficient

UF Games  Alior Bank

Average diversification

The 3 months correlation between UFG and Alior is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding UF Games 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 UF Games 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 UF Games 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 UF Games i.e., UF Games and Alior Bank go up and down completely randomly.

Pair Corralation between UF Games and Alior Bank

Assuming the 90 days trading horizon UF Games is expected to generate 1.26 times less return on investment than Alior Bank. In addition to that, UF Games is 1.73 times more volatile than Alior Bank SA. It trades about 0.11 of its total potential returns per unit of risk. Alior Bank SA is currently generating about 0.24 per unit of volatility. If you would invest  8,598  in Alior Bank SA on December 29, 2024 and sell it today you would earn a total of  3,502  from holding Alior Bank SA or generate 40.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.03%
Values	Daily Returns

UF Games SA  vs.  Alior Bank SA

UF Games SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UF Games SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, UF Games reported solid returns over the last few months and may actually be approaching a breakup point.

Alior Bank SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alior Bank SA are ranked lower than 19 (%) 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 UF Games and Alior Bank

The main advantage of trading using opposite UF Games and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UF Games 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 UF Games 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.