Correlation Between Eurobank Ergasias and United Overseas

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

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

Diversification Opportunities for Eurobank Ergasias and United Overseas

-0.63

Correlation Coefficient

Eurobank Ergasias  United Overseas

Excellent diversification

The 3 months correlation between Eurobank and United is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eurobank Ergasias Services and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank and Eurobank Ergasias 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 Eurobank Ergasias Services are associated (or correlated) with United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Eurobank Ergasias i.e., Eurobank Ergasias and United Overseas go up and down completely randomly.

Pair Corralation between Eurobank Ergasias and United Overseas

Assuming the 90 days horizon Eurobank Ergasias Services is expected to generate 2.02 times more return on investment than United Overseas. However, Eurobank Ergasias is 2.02 times more volatile than United Overseas Bank. It trades about 0.22 of its potential returns per unit of risk. United Overseas Bank is currently generating about -0.08 per unit of risk. If you would invest  209.00  in Eurobank Ergasias Services on October 10, 2024 and sell it today you would earn a total of  15.00  from holding Eurobank Ergasias Services or generate 7.18% return on investment over 90 days.

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

Eurobank Ergasias Services  vs.  United Overseas Bank

Eurobank Ergasias

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Eurobank Ergasias is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

United Overseas Bank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, United Overseas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Eurobank Ergasias and United Overseas

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

The idea behind Eurobank Ergasias Services and United Overseas Bank 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.