Correlation Between Farmers and Eurobank Ergasias

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

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

Diversification Opportunities for Farmers and Eurobank Ergasias

-0.45

Correlation Coefficient

Farmers  Eurobank Ergasias

Very good diversification

The 3 months correlation between Farmers and Eurobank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Farmers and Merchants and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Farmers 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 Farmers and Merchants are associated (or correlated) with Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Farmers i.e., Farmers and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Farmers and Eurobank Ergasias

Given the investment horizon of 90 days Farmers and Merchants is expected to generate 2.24 times more return on investment than Eurobank Ergasias. However, Farmers is 2.24 times more volatile than Eurobank Ergasias Services. It trades about 0.09 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.1 per unit of risk. If you would invest  1,485  in Farmers and Merchants on December 21, 2024 and sell it today you would earn a total of  315.00  from holding Farmers and Merchants or generate 21.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.66%
Values	Daily Returns

Farmers and Merchants  vs.  Eurobank Ergasias Services

Farmers and Merchants

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers and Merchants are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Farmers reported solid returns over the last few months and may actually be approaching a breakup point.

Eurobank Ergasias

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Eurobank Ergasias reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farmers and Eurobank Ergasias

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

The idea behind Farmers and Merchants and Eurobank Ergasias Services 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.