Correlation Between Piraeus Port and Athens Water

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

By analyzing existing cross correlation between Piraeus Port Authority and Athens Water Supply, you can compare the effects of market volatilities on Piraeus Port and Athens Water 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 Piraeus Port with a short position of Athens Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piraeus Port and Athens Water.

Diversification Opportunities for Piraeus Port and Athens Water

0.43

Correlation Coefficient

Piraeus Port  Athens Water

Very weak diversification

The 3 months correlation between Piraeus and Athens is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Port Authority and Athens Water Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athens Water Supply and Piraeus Port 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 Piraeus Port Authority are associated (or correlated) with Athens Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athens Water Supply has no effect on the direction of Piraeus Port i.e., Piraeus Port and Athens Water go up and down completely randomly.

Pair Corralation between Piraeus Port and Athens Water

Assuming the 90 days trading horizon Piraeus Port Authority is expected to generate 1.32 times more return on investment than Athens Water. However, Piraeus Port is 1.32 times more volatile than Athens Water Supply. It trades about 0.39 of its potential returns per unit of risk. Athens Water Supply is currently generating about -0.06 per unit of risk. If you would invest  2,950  in Piraeus Port Authority on December 5, 2024 and sell it today you would earn a total of  350.00  from holding Piraeus Port Authority or generate 11.86% return on investment over 90 days.

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

Piraeus Port Authority  vs.  Athens Water Supply

Piraeus Port Authority

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Port Authority are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Piraeus Port may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Athens Water Supply

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Piraeus Port and Athens Water

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

The idea behind Piraeus Port Authority and Athens Water Supply 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.