Correlation Between Sidma SA and Bank of Greece

Can any of the company-specific risk be diversified away by investing in both Sidma SA 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 Sidma SA 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 Sidma SA Steel and Bank of Greece, you can compare the effects of market volatilities on Sidma SA 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 Sidma SA with a short position of Bank of Greece. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sidma SA and Bank of Greece.

Diversification Opportunities for Sidma SA and Bank of Greece

0.08

Correlation Coefficient

Sidma SA  Bank of Greece

Significant diversification

The 3 months correlation between Sidma and Bank is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sidma SA Steel 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 Sidma SA 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 Sidma SA Steel 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 Sidma SA i.e., Sidma SA and Bank of Greece go up and down completely randomly.

Pair Corralation between Sidma SA and Bank of Greece

Assuming the 90 days trading horizon Sidma SA is expected to generate 5.79 times less return on investment than Bank of Greece. In addition to that, Sidma SA is 1.56 times more volatile than Bank of Greece. It trades about 0.03 of its total potential returns per unit of risk. Bank of Greece is currently generating about 0.3 per unit of volatility. If you would invest  1,420  in Bank of Greece on October 10, 2024 and sell it today you would earn a total of  65.00  from holding Bank of Greece or generate 4.58% return on investment over 90 days.

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

Sidma SA Steel  vs.  Bank of Greece

Sidma SA Steel

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sidma SA Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sidma SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bank of Greece

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Greece are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bank of Greece unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sidma SA and Bank of Greece

The main advantage of trading using opposite Sidma SA and Bank of Greece positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sidma SA 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 Sidma SA Steel 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.