Correlation Between Piraeus Financial and Viohalco

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

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

Diversification Opportunities for Piraeus Financial and Viohalco

0.75

Correlation Coefficient

Piraeus Financial  Viohalco

Poor diversification

The 3 months correlation between Piraeus and Viohalco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Financial Holdings and Viohalco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viohalco SA and Piraeus Financial 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 Financial Holdings are associated (or correlated) with Viohalco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viohalco SA has no effect on the direction of Piraeus Financial i.e., Piraeus Financial and Viohalco go up and down completely randomly.

Pair Corralation between Piraeus Financial and Viohalco

Assuming the 90 days trading horizon Piraeus Financial Holdings is expected to generate 1.03 times more return on investment than Viohalco. However, Piraeus Financial is 1.03 times more volatile than Viohalco SA. It trades about 0.03 of its potential returns per unit of risk. Viohalco SA is currently generating about 0.02 per unit of risk. If you would invest  344.00  in Piraeus Financial Holdings on September 1, 2024 and sell it today you would earn a total of  3.00  from holding Piraeus Financial Holdings or generate 0.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Piraeus Financial Holdings  vs.  Viohalco SA

Piraeus Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piraeus Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Viohalco SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viohalco SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Piraeus Financial and Viohalco

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

The idea behind Piraeus Financial Holdings and Viohalco SA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.