Correlation Between Adiuvo Investment and Alior Bank

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

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

Diversification Opportunities for Adiuvo Investment and Alior Bank

-0.4

Correlation Coefficient

Adiuvo Investment  Alior Bank

Very good diversification

The 3 months correlation between Adiuvo and Alior is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Adiuvo Investment 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 Adiuvo Investment 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 Adiuvo Investment 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 Adiuvo Investment i.e., Adiuvo Investment and Alior Bank go up and down completely randomly.

Pair Corralation between Adiuvo Investment and Alior Bank

Assuming the 90 days trading horizon Adiuvo Investment SA is expected to generate 3.76 times more return on investment than Alior Bank. However, Adiuvo Investment is 3.76 times more volatile than Alior Bank SA. It trades about 0.06 of its potential returns per unit of risk. Alior Bank SA is currently generating about -0.01 per unit of risk. If you would invest  32.00  in Adiuvo Investment SA on September 12, 2024 and sell it today you would earn a total of  3.00  from holding Adiuvo Investment SA or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Adiuvo Investment SA  vs.  Alior Bank SA

Adiuvo Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adiuvo Investment SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Adiuvo Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Alior Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alior Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Alior Bank is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Adiuvo Investment and Alior Bank

The main advantage of trading using opposite Adiuvo Investment and Alior Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adiuvo Investment 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 Adiuvo Investment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.