Correlation Between JAPAN POST and Eurobank Ergasias

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

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

Diversification Opportunities for JAPAN POST and Eurobank Ergasias

-0.4

Correlation Coefficient

JAPAN POST  Eurobank Ergasias

Very good diversification

The 3 months correlation between JAPAN and Eurobank is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN POST BANK and Eurobank Ergasias SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and JAPAN POST 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 JAPAN POST 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 JAPAN POST i.e., JAPAN POST and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between JAPAN POST and Eurobank Ergasias

Assuming the 90 days horizon JAPAN POST BANK is expected to under-perform the Eurobank Ergasias. In addition to that, JAPAN POST is 17.69 times more volatile than Eurobank Ergasias SA. It trades about -0.15 of its total potential returns per unit of risk. Eurobank Ergasias SA is currently generating about 0.14 per unit of volatility. If you would invest  109.00  in Eurobank Ergasias SA on December 30, 2024 and sell it today you would earn a total of  32.00  from holding Eurobank Ergasias SA or generate 29.36% return on investment over 90 days.

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

JAPAN POST BANK  vs.  Eurobank Ergasias SA

JAPAN POST BANK

Risk-Adjusted Performance

Modest

Over the last 90 days JAPAN POST BANK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eurobank Ergasias

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Eurobank Ergasias showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JAPAN POST and Eurobank Ergasias

The main advantage of trading using opposite JAPAN POST and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN POST 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 JAPAN POST BANK and Eurobank Ergasias 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.