Correlation Between Optima Bank and Piraeus Financial

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

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

Diversification Opportunities for Optima Bank and Piraeus Financial

0.24

Correlation Coefficient

Optima Bank  Piraeus Financial

Modest diversification

The 3 months correlation between Optima and Piraeus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Optima bank SA and Piraeus Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Financial and Optima Bank 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 Optima bank SA are associated (or correlated) with Piraeus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Financial has no effect on the direction of Optima Bank i.e., Optima Bank and Piraeus Financial go up and down completely randomly.

Pair Corralation between Optima Bank and Piraeus Financial

Assuming the 90 days trading horizon Optima Bank is expected to generate 38.96 times less return on investment than Piraeus Financial. But when comparing it to its historical volatility, Optima bank SA is 1.76 times less risky than Piraeus Financial. It trades about 0.0 of its potential returns per unit of risk. Piraeus Financial Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  388.00  in Piraeus Financial Holdings on October 21, 2024 and sell it today you would earn a total of  44.00  from holding Piraeus Financial Holdings or generate 11.34% return on investment over 90 days.

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

Optima bank SA  vs.  Piraeus Financial Holdings

Optima bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Optima Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Piraeus Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Financial Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Piraeus Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Optima Bank and Piraeus Financial

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

The idea behind Optima bank SA and Piraeus Financial Holdings 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.