Correlation Between GEK TERNA and IKloukinas ILappas

Can any of the company-specific risk be diversified away by investing in both GEK TERNA and IKloukinas ILappas 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 IKloukinas ILappas 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 IKloukinas ILappas SA, you can compare the effects of market volatilities on GEK TERNA and IKloukinas ILappas 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 IKloukinas ILappas. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEK TERNA and IKloukinas ILappas.

Diversification Opportunities for GEK TERNA and IKloukinas ILappas

0.31

Correlation Coefficient

GEK TERNA  IKloukinas ILappas

Weak diversification

The 3 months correlation between GEK and IKloukinas is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GEK TERNA Holdings and IKloukinas ILappas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IKloukinas ILappas 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 IKloukinas ILappas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IKloukinas ILappas has no effect on the direction of GEK TERNA i.e., GEK TERNA and IKloukinas ILappas go up and down completely randomly.

Pair Corralation between GEK TERNA and IKloukinas ILappas

Assuming the 90 days trading horizon GEK TERNA is expected to generate 14.33 times less return on investment than IKloukinas ILappas. But when comparing it to its historical volatility, GEK TERNA Holdings is 2.09 times less risky than IKloukinas ILappas. It trades about 0.03 of its potential returns per unit of risk. IKloukinas ILappas SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  147.00  in IKloukinas ILappas SA on December 24, 2024 and sell it today you would earn a total of  25.00  from holding IKloukinas ILappas SA or generate 17.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.58%
Values	Daily Returns

GEK TERNA Holdings  vs.  IKloukinas ILappas SA

GEK TERNA Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GEK TERNA Holdings are ranked lower than 2 (%) 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.

IKloukinas ILappas

Risk-Adjusted Performance

Good

Over the last 90 days IKloukinas ILappas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain primary indicators, IKloukinas ILappas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEK TERNA and IKloukinas ILappas

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

The idea behind GEK TERNA Holdings and IKloukinas ILappas SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.