Correlation Between GM and Piraeus Bank

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

By analyzing existing cross correlation between General Motors and Piraeus Bank SA, you can compare the effects of market volatilities on GM and Piraeus Bank 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 GM with a short position of Piraeus Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Piraeus Bank.

Diversification Opportunities for GM and Piraeus Bank

-0.28

Correlation Coefficient

GM  Piraeus Bank

Very good diversification

The 3 months correlation between GM and Piraeus is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Piraeus Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Bank SA and GM 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 General Motors are associated (or correlated) with Piraeus Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Bank SA has no effect on the direction of GM i.e., GM and Piraeus Bank go up and down completely randomly.

Pair Corralation between GM and Piraeus Bank

Allowing for the 90-day total investment horizon GM is expected to generate 1.16 times less return on investment than Piraeus Bank. But when comparing it to its historical volatility, General Motors is 1.35 times less risky than Piraeus Bank. It trades about 0.06 of its potential returns per unit of risk. Piraeus Bank SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  360.00  in Piraeus Bank SA on November 20, 2024 and sell it today you would earn a total of  131.00  from holding Piraeus Bank SA or generate 36.39% return on investment over 90 days.

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

General Motors  vs.  Piraeus Bank SA

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Piraeus Bank SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Bank SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Piraeus Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Piraeus Bank

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

The idea behind General Motors and Piraeus Bank 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.