Correlation Between Alior Bank and Prudential Financial

Can any of the company-specific risk be diversified away by investing in both Alior Bank and Prudential Financial 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 Prudential Financial 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 Prudential Financial, you can compare the effects of market volatilities on Alior Bank and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Prudential Financial.

Diversification Opportunities for Alior Bank and Prudential Financial

0.0

Correlation Coefficient

Alior Bank  Prudential Financial

Pay attention - limited upside

The 3 months correlation between Alior and Prudential is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Alior Bank i.e., Alior Bank and Prudential Financial go up and down completely randomly.

Pair Corralation between Alior Bank and Prudential Financial

If you would invest  12,192  in Prudential Financial on August 26, 2024 and sell it today you would earn a total of  642.00  from holding Prudential Financial or generate 5.27% return on investment over 90 days.

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

Alior Bank SA  vs.  Prudential Financial

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. 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.

Prudential Financial

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Prudential Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Alior Bank and Prudential Financial

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

The idea behind Alior Bank SA and Prudential Financial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.