Correlation Between CPI Computer and Bank of Greece

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

Diversification Opportunities for CPI Computer and Bank of Greece

0.62

Correlation Coefficient

CPI Computer  Bank of Greece

Poor diversification

The 3 months correlation between CPI and Bank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CPI Computer Peripherals and Bank of Greece in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Greece 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 Bank of Greece. 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 Greece has no effect on the direction of CPI Computer i.e., CPI Computer and Bank of Greece go up and down completely randomly.

Pair Corralation between CPI Computer and Bank of Greece

Assuming the 90 days trading horizon CPI Computer Peripherals is expected to under-perform the Bank of Greece. In addition to that, CPI Computer is 2.7 times more volatile than Bank of Greece. It trades about -0.13 of its total potential returns per unit of risk. Bank of Greece is currently generating about -0.08 per unit of volatility. If you would invest  1,370  in Bank of Greece on September 2, 2024 and sell it today you would lose (60.00) from holding Bank of Greece or give up 4.38% of portfolio value over 90 days.

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

CPI Computer Peripherals  vs.  Bank of Greece

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.

Bank of Greece

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Greece has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bank of Greece is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CPI Computer and Bank of Greece

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

The idea behind CPI Computer Peripherals and Bank of Greece 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.