Correlation Between GEK TERNA and Athens Medical

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

By analyzing existing cross correlation between GEK TERNA Holdings and Athens Medical CSA, you can compare the effects of market volatilities on GEK TERNA and Athens Medical 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 GEK TERNA with a short position of Athens Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEK TERNA and Athens Medical.

Diversification Opportunities for GEK TERNA and Athens Medical

0.12

Correlation Coefficient

GEK TERNA  Athens Medical

Average diversification

The 3 months correlation between GEK and Athens is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding GEK TERNA Holdings and Athens Medical CSA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athens Medical CSA and GEK TERNA 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 GEK TERNA Holdings are associated (or correlated) with Athens Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athens Medical CSA has no effect on the direction of GEK TERNA i.e., GEK TERNA and Athens Medical go up and down completely randomly.

Pair Corralation between GEK TERNA and Athens Medical

Assuming the 90 days trading horizon GEK TERNA Holdings is expected to generate 0.56 times more return on investment than Athens Medical. However, GEK TERNA Holdings is 1.78 times less risky than Athens Medical. It trades about 0.1 of its potential returns per unit of risk. Athens Medical CSA is currently generating about -0.03 per unit of risk. If you would invest  1,760  in GEK TERNA Holdings on September 1, 2024 and sell it today you would earn a total of  102.00  from holding GEK TERNA Holdings or generate 5.8% return on investment over 90 days.

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

GEK TERNA Holdings  vs.  Athens Medical CSA

GEK TERNA Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GEK TERNA Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, GEK TERNA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Athens Medical CSA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athens Medical CSA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Athens Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GEK TERNA and Athens Medical

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

The idea behind GEK TERNA Holdings and Athens Medical CSA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.