Correlation Between CPI Computer and Eurobank Ergasias

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

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

Diversification Opportunities for CPI Computer and Eurobank Ergasias

-0.25

Correlation Coefficient

CPI Computer  Eurobank Ergasias

Very good diversification

The 3 months correlation between CPI and Eurobank is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CPI Computer Peripherals and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and CPI Computer 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 CPI Computer Peripherals 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 CPI Computer i.e., CPI Computer and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between CPI Computer and Eurobank Ergasias

Assuming the 90 days trading horizon CPI Computer Peripherals is expected to under-perform the Eurobank Ergasias. In addition to that, CPI Computer is 1.44 times more volatile than Eurobank Ergasias Services. It trades about -0.12 of its total potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.14 per unit of volatility. If you would invest  195.00  in Eurobank Ergasias Services on September 12, 2024 and sell it today you would earn a total of  29.00  from holding Eurobank Ergasias Services or generate 14.87% return on investment over 90 days.

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

CPI Computer Peripherals  vs.  Eurobank Ergasias Services

CPI Computer Peripherals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPI Computer Peripherals 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 forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Eurobank Ergasias

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eurobank Ergasias sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPI Computer and Eurobank Ergasias

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

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.