Correlation Between Dromeas SA and Vogiatzoglou Systems

Can any of the company-specific risk be diversified away by investing in both Dromeas SA and Vogiatzoglou Systems 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 Dromeas SA and Vogiatzoglou Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Dromeas SA and Vogiatzoglou Systems

0.6

Correlation Coefficient

Dromeas SA  Vogiatzoglou Systems

Poor diversification

The 3 months correlation between Dromeas and Vogiatzoglou is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dromeas SA and Vogiatzoglou Systems SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vogiatzoglou Systems and Dromeas SA 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 Dromeas SA are associated (or correlated) with Vogiatzoglou Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vogiatzoglou Systems has no effect on the direction of Dromeas SA i.e., Dromeas SA and Vogiatzoglou Systems go up and down completely randomly.

Pair Corralation between Dromeas SA and Vogiatzoglou Systems

Assuming the 90 days trading horizon Dromeas SA is expected to generate 1.69 times more return on investment than Vogiatzoglou Systems. However, Dromeas SA is 1.69 times more volatile than Vogiatzoglou Systems SA. It trades about 0.05 of its potential returns per unit of risk. Vogiatzoglou Systems SA is currently generating about 0.07 per unit of risk. If you would invest  31.00  in Dromeas SA on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Dromeas SA or generate 6.45% return on investment over 90 days.

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

Dromeas SA  vs.  Vogiatzoglou Systems SA

Dromeas SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dromeas SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dromeas SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vogiatzoglou Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vogiatzoglou Systems SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Vogiatzoglou Systems may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dromeas SA and Vogiatzoglou Systems

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

The idea behind Dromeas SA and Vogiatzoglou Systems 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.