Correlation Between Bank of Greece and Entersoft

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

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

Diversification Opportunities for Bank of Greece and Entersoft

0.36

Correlation Coefficient

Bank of Greece  Entersoft

Weak diversification

The 3 months correlation between Bank and Entersoft is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Greece and Entersoft SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entersoft SA and Bank of Greece 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 of Greece are associated (or correlated) with Entersoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entersoft SA has no effect on the direction of Bank of Greece i.e., Bank of Greece and Entersoft go up and down completely randomly.

Pair Corralation between Bank of Greece and Entersoft

Assuming the 90 days trading horizon Bank of Greece is expected to under-perform the Entersoft. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Greece is 1.3 times less risky than Entersoft. The stock trades about -0.05 of its potential returns per unit of risk. The Entersoft SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Entersoft SA on March 21, 2024 and sell it today you would earn a total of  290.00  from holding Entersoft SA or generate 58.0% return on investment over 90 days.

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

Bank of Greece  vs.  Entersoft SA

Bank of Greece

Risk-Adjusted Performance

0 of 100

Very Weak

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

Entersoft SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entersoft SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Entersoft is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of Greece and Entersoft

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

The idea behind Bank of Greece and Entersoft 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.