Correlation Between Alpha Bank and Bankinter

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

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

Diversification Opportunities for Alpha Bank and Bankinter

0.61

Correlation Coefficient

Alpha Bank  Bankinter

Poor diversification

The 3 months correlation between Alpha and Bankinter is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Bank SA and Bankinter SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA ADR and Alpha Bank 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 Alpha Bank SA are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA ADR has no effect on the direction of Alpha Bank i.e., Alpha Bank and Bankinter go up and down completely randomly.

Pair Corralation between Alpha Bank and Bankinter

Assuming the 90 days horizon Alpha Bank SA is expected to under-perform the Bankinter. In addition to that, Alpha Bank is 1.2 times more volatile than Bankinter SA ADR. It trades about -0.04 of its total potential returns per unit of risk. Bankinter SA ADR is currently generating about -0.03 per unit of volatility. If you would invest  887.00  in Bankinter SA ADR on September 4, 2024 and sell it today you would lose (72.00) from holding Bankinter SA ADR or give up 8.12% of portfolio value over 90 days.

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

Alpha Bank SA  vs.  Bankinter SA ADR

Alpha Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bankinter SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bankinter SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Bankinter is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpha Bank and Bankinter

The main advantage of trading using opposite Alpha Bank and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Bank position performs unexpectedly, Bankinter 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 Bankinter will offset losses from the drop in Bankinter's long position.

The idea behind Alpha Bank SA and Bankinter SA ADR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.