Correlation Between Herc Holdings and Okeanis Eco

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

By analyzing existing cross correlation between Herc Holdings and Okeanis Eco Tankers, you can compare the effects of market volatilities on Herc Holdings and Okeanis Eco 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 Herc Holdings with a short position of Okeanis Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herc Holdings and Okeanis Eco.

Diversification Opportunities for Herc Holdings and Okeanis Eco

0.22

Correlation Coefficient

Herc Holdings  Okeanis Eco

Modest diversification

The 3 months correlation between Herc and Okeanis is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Herc Holdings and Okeanis Eco Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okeanis Eco Tankers and Herc Holdings 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 Herc Holdings are associated (or correlated) with Okeanis Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okeanis Eco Tankers has no effect on the direction of Herc Holdings i.e., Herc Holdings and Okeanis Eco go up and down completely randomly.

Pair Corralation between Herc Holdings and Okeanis Eco

Considering the 90-day investment horizon Herc Holdings is expected to generate 1.03 times less return on investment than Okeanis Eco. But when comparing it to its historical volatility, Herc Holdings is 1.52 times less risky than Okeanis Eco. It trades about 0.19 of its potential returns per unit of risk. Okeanis Eco Tankers is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,157  in Okeanis Eco Tankers on October 25, 2024 and sell it today you would earn a total of  184.00  from holding Okeanis Eco Tankers or generate 8.53% return on investment over 90 days.

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

Herc Holdings  vs.  Okeanis Eco Tankers

Herc Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Herc Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Herc Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Okeanis Eco Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Okeanis Eco Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Herc Holdings and Okeanis Eco

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

The idea behind Herc Holdings and Okeanis Eco Tankers 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.