Correlation Between Motor Oil and Bank of Greece

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

By analyzing existing cross correlation between Motor Oil Corinth and Bank of Greece, you can compare the effects of market volatilities on Motor Oil and Bank of Greece 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 Motor Oil with a short position of Bank of Greece. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motor Oil and Bank of Greece.

Diversification Opportunities for Motor Oil and Bank of Greece

0.37

Correlation Coefficient

Motor Oil  Bank of Greece

Weak diversification

The 3 months correlation between Motor and Bank is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Motor Oil Corinth and Bank of Greece in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Greece and Motor Oil 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 Motor Oil Corinth are associated (or correlated) with Bank of Greece. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Greece has no effect on the direction of Motor Oil i.e., Motor Oil and Bank of Greece go up and down completely randomly.

Pair Corralation between Motor Oil and Bank of Greece

Assuming the 90 days trading horizon Motor Oil Corinth is expected to generate 1.68 times more return on investment than Bank of Greece. However, Motor Oil is 1.68 times more volatile than Bank of Greece. It trades about 0.12 of its potential returns per unit of risk. Bank of Greece is currently generating about 0.02 per unit of risk. If you would invest  2,052  in Motor Oil Corinth on December 26, 2024 and sell it today you would earn a total of  192.00  from holding Motor Oil Corinth or generate 9.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Motor Oil Corinth  vs.  Bank of Greece

Motor Oil Corinth

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motor Oil Corinth are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Motor Oil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bank of Greece

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Greece are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bank of Greece is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Motor Oil and Bank of Greece

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

The idea behind Motor Oil Corinth and Bank of Greece 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.