Correlation Between PSB Holdings and Eurobank Ergasias

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

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

Diversification Opportunities for PSB Holdings and Eurobank Ergasias

-0.59

Correlation Coefficient

PSB Holdings  Eurobank Ergasias

Excellent diversification

The 3 months correlation between PSB and Eurobank is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and PSB Holdings 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 PSB Holdings 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 PSB Holdings i.e., PSB Holdings and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between PSB Holdings and Eurobank Ergasias

Given the investment horizon of 90 days PSB Holdings is expected to under-perform the Eurobank Ergasias. But the otc stock apears to be less risky and, when comparing its historical volatility, PSB Holdings is 1.5 times less risky than Eurobank Ergasias. The otc stock trades about -0.13 of its potential returns per unit of risk. The Eurobank Ergasias Services is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  209.00  in Eurobank Ergasias Services on October 10, 2024 and sell it today you would earn a total of  15.00  from holding Eurobank Ergasias Services or generate 7.18% return on investment over 90 days.

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

PSB Holdings  vs.  Eurobank Ergasias Services

PSB Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PSB Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, PSB Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Eurobank Ergasias

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Eurobank Ergasias is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PSB Holdings and Eurobank Ergasias

The main advantage of trading using opposite PSB Holdings and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSB Holdings 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 PSB Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.