Correlation Between Euroseas and Okeanis Eco

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

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

Diversification Opportunities for Euroseas and Okeanis Eco

-0.23

Correlation Coefficient

Euroseas  Okeanis Eco

Very good diversification

The 3 months correlation between Euroseas and Okeanis is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Euroseas and Okeanis Eco Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okeanis Eco Tankers and Euroseas 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 Euroseas are associated (or correlated) with Okeanis Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okeanis Eco Tankers has no effect on the direction of Euroseas i.e., Euroseas and Okeanis Eco go up and down completely randomly.

Pair Corralation between Euroseas and Okeanis Eco

Given the investment horizon of 90 days Euroseas is expected to under-perform the Okeanis Eco. In addition to that, Euroseas is 1.18 times more volatile than Okeanis Eco Tankers. It trades about -0.02 of its total potential returns per unit of risk. Okeanis Eco Tankers is currently generating about 0.07 per unit of volatility. If you would invest  2,035  in Okeanis Eco Tankers on December 29, 2024 and sell it today you would earn a total of  227.00  from holding Okeanis Eco Tankers or generate 11.15% return on investment over 90 days.

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

Euroseas  vs.  Okeanis Eco Tankers

Euroseas

Risk-Adjusted Performance

Very Weak

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

Okeanis Eco Tankers

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Okeanis Eco Tankers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Okeanis Eco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Euroseas and Okeanis Eco

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

The idea behind Euroseas and Okeanis Eco Tankers 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.