Correlation Between Athens Medical and Piraeus Financial

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

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

Diversification Opportunities for Athens Medical and Piraeus Financial

0.05

Correlation Coefficient

Athens Medical  Piraeus Financial

Significant diversification

The 3 months correlation between Athens and Piraeus is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Athens Medical CSA and Piraeus Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Financial and Athens Medical 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 Athens Medical CSA are associated (or correlated) with Piraeus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Financial has no effect on the direction of Athens Medical i.e., Athens Medical and Piraeus Financial go up and down completely randomly.

Pair Corralation between Athens Medical and Piraeus Financial

Assuming the 90 days trading horizon Athens Medical CSA is expected to generate 1.38 times more return on investment than Piraeus Financial. However, Athens Medical is 1.38 times more volatile than Piraeus Financial Holdings. It trades about 0.02 of its potential returns per unit of risk. Piraeus Financial Holdings is currently generating about -0.05 per unit of risk. If you would invest  169.00  in Athens Medical CSA on February 6, 2024 and sell it today you would earn a total of  1.00  from holding Athens Medical CSA or generate 0.59% return on investment over 90 days.

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

Athens Medical CSA  vs.  Piraeus Financial Holdings

Athens Medical CSA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athens Medical CSA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Piraeus Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Athens Medical and Piraeus Financial

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

The idea behind Athens Medical CSA and Piraeus Financial Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.