Correlation Between Hellenic Petroleum and Cenergy Holdings

Can any of the company-specific risk be diversified away by investing in both Hellenic Petroleum and Cenergy Holdings 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 Hellenic Petroleum and Cenergy Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hellenic Petroleum and Cenergy Holdings

0.61

Correlation Coefficient

Hellenic Petroleum  Cenergy Holdings

Poor diversification

The 3 months correlation between Hellenic and Cenergy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hellenic Petroleum SA and Cenergy Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenergy Holdings and Hellenic Petroleum 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 Hellenic Petroleum SA are associated (or correlated) with Cenergy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenergy Holdings has no effect on the direction of Hellenic Petroleum i.e., Hellenic Petroleum and Cenergy Holdings go up and down completely randomly.

Pair Corralation between Hellenic Petroleum and Cenergy Holdings

Assuming the 90 days trading horizon Hellenic Petroleum SA is expected to generate 0.85 times more return on investment than Cenergy Holdings. However, Hellenic Petroleum SA is 1.17 times less risky than Cenergy Holdings. It trades about 0.19 of its potential returns per unit of risk. Cenergy Holdings SA is currently generating about -0.01 per unit of risk. If you would invest  687.00  in Hellenic Petroleum SA on December 4, 2024 and sell it today you would earn a total of  93.00  from holding Hellenic Petroleum SA or generate 13.54% return on investment over 90 days.

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

Hellenic Petroleum SA  vs.  Cenergy Holdings SA

Hellenic Petroleum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hellenic Petroleum SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hellenic Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cenergy Holdings

Risk-Adjusted Performance

Weak

Over the last 90 days Cenergy Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cenergy Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hellenic Petroleum and Cenergy Holdings

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

The idea behind Hellenic Petroleum SA and Cenergy Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.