Correlation Between Aozora Bank and Eurobank Ergasias

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

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

Diversification Opportunities for Aozora Bank and Eurobank Ergasias

-0.59

Correlation Coefficient

Aozora Bank  Eurobank Ergasias

Excellent diversification

The 3 months correlation between Aozora and Eurobank is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aozora Bank Ltd and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Aozora 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 Aozora Bank Ltd 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 Aozora Bank i.e., Aozora Bank and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Aozora Bank and Eurobank Ergasias

Assuming the 90 days horizon Aozora Bank Ltd is expected to under-perform the Eurobank Ergasias. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aozora Bank Ltd is 1.02 times less risky than Eurobank Ergasias. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Eurobank Ergasias Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Eurobank Ergasias Services on October 24, 2024 and sell it today you would earn a total of  24.00  from holding Eurobank Ergasias Services or generate 11.16% return on investment over 90 days.

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

Aozora Bank Ltd  vs.  Eurobank Ergasias Services

Aozora Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aozora Bank Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Eurobank Ergasias

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Eurobank Ergasias may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aozora Bank and Eurobank Ergasias

The main advantage of trading using opposite Aozora Bank and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aozora Bank 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 Aozora Bank Ltd 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.