Correlation Between Viohalco and Piraeus Financial

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

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

Diversification Opportunities for Viohalco and Piraeus Financial

0.67

Correlation Coefficient

Viohalco  Piraeus Financial

Poor diversification

The 3 months correlation between Viohalco and Piraeus is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Viohalco SA and Piraeus Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Financial and Viohalco 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 Viohalco SA are associated (or correlated) with Piraeus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Financial has no effect on the direction of Viohalco i.e., Viohalco and Piraeus Financial go up and down completely randomly.

Pair Corralation between Viohalco and Piraeus Financial

Assuming the 90 days trading horizon Viohalco SA is expected to under-perform the Piraeus Financial. But the stock apears to be less risky and, when comparing its historical volatility, Viohalco SA is 1.12 times less risky than Piraeus Financial. The stock trades about -0.01 of its potential returns per unit of risk. The Piraeus Financial Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  385.00  in Piraeus Financial Holdings on September 14, 2024 and sell it today you would earn a total of  6.00  from holding Piraeus Financial Holdings or generate 1.56% return on investment over 90 days.

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

Viohalco SA  vs.  Piraeus Financial Holdings

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 comparatively stable basic indicators, Viohalco is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Piraeus Financial

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Viohalco and Piraeus Financial

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

The idea behind Viohalco SA and Piraeus Financial Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.