Correlation Between N Leventeris and Eurobank Ergasias

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

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

Diversification Opportunities for N Leventeris and Eurobank Ergasias

-0.14

Correlation Coefficient

N Leventeris  Eurobank Ergasias

Good diversification

The 3 months correlation between LEBEP and Eurobank is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding N Leventeris SA and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and N Leventeris 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 N Leventeris SA 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 N Leventeris i.e., N Leventeris and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between N Leventeris and Eurobank Ergasias

Assuming the 90 days trading horizon N Leventeris SA is expected to generate 4.45 times more return on investment than Eurobank Ergasias. However, N Leventeris is 4.45 times more volatile than Eurobank Ergasias Services. It trades about 0.04 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.05 per unit of risk. If you would invest  26.00  in N Leventeris SA on September 5, 2024 and sell it today you would earn a total of  0.00  from holding N Leventeris SA or generate 0.0% return on investment over 90 days.

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

N Leventeris SA  vs.  Eurobank Ergasias Services

N Leventeris SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in N Leventeris SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, N Leventeris sustained solid returns over the last few months and may actually be approaching a breakup point.

Eurobank Ergasias

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eurobank Ergasias is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with N Leventeris and Eurobank Ergasias

The main advantage of trading using opposite N Leventeris and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if N Leventeris 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 N Leventeris SA and Eurobank Ergasias Services 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.