Correlation Between Central Pacific and Piraeus Bank

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

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

Diversification Opportunities for Central Pacific and Piraeus Bank

-0.44

Correlation Coefficient

Central Pacific  Piraeus Bank

Very good diversification

The 3 months correlation between Central and Piraeus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Central Pacific Financial and Piraeus Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Bank SA and Central Pacific 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 Central Pacific Financial are associated (or correlated) with Piraeus Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Bank SA has no effect on the direction of Central Pacific i.e., Central Pacific and Piraeus Bank go up and down completely randomly.

Pair Corralation between Central Pacific and Piraeus Bank

Considering the 90-day investment horizon Central Pacific is expected to generate 1.98 times less return on investment than Piraeus Bank. But when comparing it to its historical volatility, Central Pacific Financial is 2.07 times less risky than Piraeus Bank. It trades about 0.07 of its potential returns per unit of risk. Piraeus Bank SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  151.00  in Piraeus Bank SA on September 5, 2024 and sell it today you would earn a total of  227.00  from holding Piraeus Bank SA or generate 150.33% return on investment over 90 days.

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

Central Pacific Financial  vs.  Piraeus Bank SA

Central Pacific Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Pacific Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Central Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Central Pacific and Piraeus Bank

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

The idea behind Central Pacific Financial and Piraeus Bank 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..