Correlation Between Athens Water and Piraeus Port

Can any of the company-specific risk be diversified away by investing in both Athens Water and Piraeus Port 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 Piraeus Port 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 Piraeus Port Authority, you can compare the effects of market volatilities on Athens Water and Piraeus Port 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 Piraeus Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athens Water and Piraeus Port.

Diversification Opportunities for Athens Water and Piraeus Port

0.43

Correlation Coefficient

Athens Water  Piraeus Port

Very weak diversification

The 3 months correlation between Athens and Piraeus is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Athens Water Supply and Piraeus Port Authority in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Port Authority 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 Piraeus Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Port Authority has no effect on the direction of Athens Water i.e., Athens Water and Piraeus Port go up and down completely randomly.

Pair Corralation between Athens Water and Piraeus Port

Assuming the 90 days trading horizon Athens Water Supply is expected to under-perform the Piraeus Port. But the stock apears to be less risky and, when comparing its historical volatility, Athens Water Supply is 1.37 times less risky than Piraeus Port. The stock trades about -0.02 of its potential returns per unit of risk. The Piraeus Port Authority is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,075  in Piraeus Port Authority on December 4, 2024 and sell it today you would earn a total of  225.00  from holding Piraeus Port Authority or generate 7.32% return on investment over 90 days.

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

Athens Water Supply  vs.  Piraeus Port Authority

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.

Piraeus Port Authority

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Port Authority are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Piraeus Port may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Athens Water and Piraeus Port

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

The idea behind Athens Water Supply and Piraeus Port Authority 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.