Correlation Between Ryanair Holdings and Alior Bank

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

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

Diversification Opportunities for Ryanair Holdings and Alior Bank

0.29

Correlation Coefficient

Ryanair Holdings  Alior Bank

Modest diversification

The 3 months correlation between Ryanair and Alior is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc 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 Ryanair Holdings 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 Ryanair Holdings plc 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 Ryanair Holdings i.e., Ryanair Holdings and Alior Bank go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Alior Bank

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to generate 0.38 times more return on investment than Alior Bank. However, Ryanair Holdings plc is 2.65 times less risky than Alior Bank. It trades about 0.14 of its potential returns per unit of risk. Alior Bank SA is currently generating about 0.02 per unit of risk. If you would invest  137,900  in Ryanair Holdings plc on September 21, 2024 and sell it today you would earn a total of  19,500  from holding Ryanair Holdings plc or generate 14.14% return on investment over 90 days.

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

Ryanair Holdings plc  vs.  Alior Bank SA

Ryanair Holdings plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Ryanair Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Alior Bank SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alior Bank SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alior Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ryanair Holdings and Alior Bank

The main advantage of trading using opposite Ryanair Holdings and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings 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 Ryanair Holdings plc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.