Correlation Between Bank Central and Eurobank Ergasias

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

By analyzing existing cross correlation between Bank Central Asia and Eurobank Ergasias Services, you can compare the effects of market volatilities on Bank Central and Eurobank Ergasias 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 Bank Central with a short position of Eurobank Ergasias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Eurobank Ergasias.

Diversification Opportunities for Bank Central and Eurobank Ergasias

-0.5

Correlation Coefficient

Bank Central  Eurobank Ergasias

Very good diversification

The 3 months correlation between Bank and Eurobank is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Bank Central 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 Bank Central Asia are associated (or correlated) with Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Bank Central i.e., Bank Central and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Bank Central and Eurobank Ergasias

Assuming the 90 days horizon Bank Central Asia is expected to under-perform the Eurobank Ergasias. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 1.48 times less risky than Eurobank Ergasias. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Eurobank Ergasias Services is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Eurobank Ergasias Services on February 3, 2024 and sell it today you would earn a total of  33.00  from holding Eurobank Ergasias Services or generate 18.13% return on investment over 90 days.

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

Bank Central Asia  vs.  Eurobank Ergasias Services

Bank Central Asia

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Central Asia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Bank Central is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eurobank Ergasias

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Eurobank Ergasias reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Central and Eurobank Ergasias

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

The idea behind Bank Central Asia and Eurobank Ergasias Services 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.