Correlation Between Terna Energy and Eurobank Ergasias

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

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

Diversification Opportunities for Terna Energy and Eurobank Ergasias

0.82

Correlation Coefficient

Terna Energy  Eurobank Ergasias

Very poor diversification

The 3 months correlation between Terna and Eurobank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Terna Energy Societe and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and Terna Energy 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 Terna Energy Societe 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 Terna Energy i.e., Terna Energy and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Terna Energy and Eurobank Ergasias

Assuming the 90 days trading horizon Terna Energy is expected to generate 13.21 times less return on investment than Eurobank Ergasias. But when comparing it to its historical volatility, Terna Energy Societe is 1.46 times less risky than Eurobank Ergasias. It trades about 0.01 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  119.00  in Eurobank Ergasias Services on October 22, 2024 and sell it today you would earn a total of  126.00  from holding Eurobank Ergasias Services or generate 105.88% return on investment over 90 days.

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

Terna Energy Societe  vs.  Eurobank Ergasias Services

Terna Energy Societe

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Terna Energy Societe are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Terna Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eurobank Ergasias

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eurobank Ergasias sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Terna Energy and Eurobank Ergasias

The main advantage of trading using opposite Terna Energy and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terna Energy 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 Terna Energy Societe 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 Global Correlations module to find global opportunities by holding instruments from different markets.