Correlation Between Alior Bank and SOFTWARE MANSION

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

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

Diversification Opportunities for Alior Bank and SOFTWARE MANSION

-0.18

Correlation Coefficient

Alior Bank  SOFTWARE MANSION

Good diversification

The 3 months correlation between Alior and SOFTWARE is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and SOFTWARE MANSION SPOLKA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTWARE MANSION SPOLKA and Alior 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 Alior Bank SA are associated (or correlated) with SOFTWARE MANSION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTWARE MANSION SPOLKA has no effect on the direction of Alior Bank i.e., Alior Bank and SOFTWARE MANSION go up and down completely randomly.

Pair Corralation between Alior Bank and SOFTWARE MANSION

Assuming the 90 days trading horizon Alior Bank SA is expected to under-perform the SOFTWARE MANSION. But the stock apears to be less risky and, when comparing its historical volatility, Alior Bank SA is 1.32 times less risky than SOFTWARE MANSION. The stock trades about -0.02 of its potential returns per unit of risk. The SOFTWARE MANSION SPOLKA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,800  in SOFTWARE MANSION SPOLKA on April 24, 2025 and sell it today you would earn a total of  1,450  from holding SOFTWARE MANSION SPOLKA or generate 38.16% return on investment over 90 days.

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

Alior Bank SA  vs.  SOFTWARE MANSION SPOLKA

Alior Bank SA

Risk-Adjusted Performance

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.

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SOFTWARE MANSION SPOLKA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, SOFTWARE MANSION reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alior Bank and SOFTWARE MANSION

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

The idea behind Alior Bank SA and SOFTWARE MANSION SPOLKA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.