Correlation Between Piraeus Financial and Biokarpet

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

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

Diversification Opportunities for Piraeus Financial and Biokarpet

-0.12

Correlation Coefficient

Piraeus Financial  Biokarpet

Good diversification

The 3 months correlation between Piraeus and Biokarpet is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Financial Holdings and Biokarpet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biokarpet SA and Piraeus Financial 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 Piraeus Financial Holdings are associated (or correlated) with Biokarpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biokarpet SA has no effect on the direction of Piraeus Financial i.e., Piraeus Financial and Biokarpet go up and down completely randomly.

Pair Corralation between Piraeus Financial and Biokarpet

Assuming the 90 days trading horizon Piraeus Financial Holdings is expected to generate 0.57 times more return on investment than Biokarpet. However, Piraeus Financial Holdings is 1.74 times less risky than Biokarpet. It trades about 0.17 of its potential returns per unit of risk. Biokarpet SA is currently generating about 0.05 per unit of risk. If you would invest  377.00  in Piraeus Financial Holdings on January 30, 2024 and sell it today you would earn a total of  21.00  from holding Piraeus Financial Holdings or generate 5.57% return on investment over 90 days.

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

Piraeus Financial Holdings  vs.  Biokarpet SA

Piraeus Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Financial Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Piraeus Financial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Biokarpet SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biokarpet SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Biokarpet is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Piraeus Financial and Biokarpet

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

The idea behind Piraeus Financial Holdings and Biokarpet 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.