Correlation Between First Resource and Eurobank Ergasias

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

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

Diversification Opportunities for First Resource and Eurobank Ergasias

-0.39

Correlation Coefficient

First Resource  Eurobank Ergasias

Very good diversification

The 3 months correlation between First and Eurobank is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Resource Bank and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and First Resource 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 First Resource Bank 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 First Resource i.e., First Resource and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between First Resource and Eurobank Ergasias

Given the investment horizon of 90 days First Resource Bank is expected to generate 0.62 times more return on investment than Eurobank Ergasias. However, First Resource Bank is 1.61 times less risky than Eurobank Ergasias. It trades about 0.06 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.02 per unit of risk. If you would invest  1,350  in First Resource Bank on October 9, 2024 and sell it today you would earn a total of  200.00  from holding First Resource Bank or generate 14.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.17%
Values	Daily Returns

First Resource Bank  vs.  Eurobank Ergasias Services

First Resource Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Resource Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First Resource may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Eurobank Ergasias

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Eurobank Ergasias is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Resource and Eurobank Ergasias

The main advantage of trading using opposite First Resource and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Resource 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 First Resource Bank 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.