Correlation Between Piraeus Bank and Bank of the Philippine Is

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

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

Diversification Opportunities for Piraeus Bank and Bank of the Philippine Is

-0.23

Correlation Coefficient

Piraeus Bank  Bank of the Philippine Is

Very good diversification

The 3 months correlation between Piraeus and Bank is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Bank SA and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the Philippine Is and Piraeus 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 Piraeus Bank SA are associated (or correlated) with Bank of the Philippine Is. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the Philippine Is has no effect on the direction of Piraeus Bank i.e., Piraeus Bank and Bank of the Philippine Is go up and down completely randomly.

Pair Corralation between Piraeus Bank and Bank of the Philippine Is

Assuming the 90 days horizon Piraeus Bank SA is expected to under-perform the Bank of the Philippine Is. But the pink sheet apears to be less risky and, when comparing its historical volatility, Piraeus Bank SA is 1.05 times less risky than Bank of the Philippine Is. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Bank of the is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  4,400  in Bank of the on August 31, 2024 and sell it today you would lose (128.00) from holding Bank of the or give up 2.91% of portfolio value over 90 days.

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

Piraeus Bank SA  vs.  Bank of the

Piraeus Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piraeus Bank SA 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.

Bank of the Philippine Is

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of the has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Bank of the Philippine Is is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Piraeus Bank and Bank of the Philippine Is

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

The idea behind Piraeus Bank SA and Bank of the 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.