Correlation Between Piraeus Bank and PT Bank

Can any of the company-specific risk be diversified away by investing in both Piraeus Bank and PT Bank 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 PT Bank 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 PT Bank Central, you can compare the effects of market volatilities on Piraeus Bank and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piraeus Bank and PT Bank.

Diversification Opportunities for Piraeus Bank and PT Bank

-0.59

Correlation Coefficient

Piraeus Bank  PT Bank

Excellent diversification

The 3 months correlation between Piraeus and PBCRF is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Bank SA and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Central has no effect on the direction of Piraeus Bank i.e., Piraeus Bank and PT Bank go up and down completely randomly.

Pair Corralation between Piraeus Bank and PT Bank

Assuming the 90 days horizon Piraeus Bank SA is expected to generate 1.08 times more return on investment than PT Bank. However, Piraeus Bank is 1.08 times more volatile than PT Bank Central. It trades about 0.05 of its potential returns per unit of risk. PT Bank Central is currently generating about 0.02 per unit of risk. If you would invest  254.00  in Piraeus Bank SA on November 20, 2024 and sell it today you would earn a total of  237.00  from holding Piraeus Bank SA or generate 93.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.13%
Values	Daily Returns

Piraeus Bank SA  vs.  PT Bank Central

Piraeus Bank SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Bank SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Piraeus Bank showed solid returns over the last few months and may actually be approaching a breakup point.

PT Bank Central

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Piraeus Bank and PT Bank

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

The idea behind Piraeus Bank SA and PT Bank Central 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.