Correlation Between Athens Water and Greek Organization

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

By analyzing existing cross correlation between Athens Water Supply and Greek Organization of, you can compare the effects of market volatilities on Athens Water and Greek Organization 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 Athens Water with a short position of Greek Organization. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athens Water and Greek Organization.

Diversification Opportunities for Athens Water and Greek Organization

0.64

Correlation Coefficient

Athens Water  Greek Organization

Poor diversification

The 3 months correlation between Athens and Greek is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Athens Water Supply and Greek Organization of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greek Organization and Athens Water 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 Athens Water Supply are associated (or correlated) with Greek Organization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greek Organization has no effect on the direction of Athens Water i.e., Athens Water and Greek Organization go up and down completely randomly.

Pair Corralation between Athens Water and Greek Organization

Assuming the 90 days trading horizon Athens Water Supply is expected to under-perform the Greek Organization. But the stock apears to be less risky and, when comparing its historical volatility, Athens Water Supply is 1.26 times less risky than Greek Organization. The stock trades about -0.12 of its potential returns per unit of risk. The Greek Organization of is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,638  in Greek Organization of on December 3, 2024 and sell it today you would earn a total of  72.00  from holding Greek Organization of or generate 4.4% return on investment over 90 days.

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

Athens Water Supply  vs.  Greek Organization of

Athens Water Supply

Risk-Adjusted Performance

Very Weak

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

Greek Organization

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greek Organization of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Greek Organization may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Athens Water and Greek Organization

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

The idea behind Athens Water Supply and Greek Organization of 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..