Correlation Between Athens Water and Lavipharm
Can any of the company-specific risk be diversified away by investing in both Athens Water and Lavipharm 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 Athens Water and Lavipharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Athens Water Supply and Lavipharm SA, you can compare the effects of market volatilities on Athens Water and Lavipharm 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 Athens Water with a short position of Lavipharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Athens Water and Lavipharm.
Diversification Opportunities for Athens Water and Lavipharm
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Athens and Lavipharm is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Athens Water Supply and Lavipharm SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavipharm SA and Athens Water 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 Athens Water Supply are associated (or correlated) with Lavipharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavipharm SA has no effect on the direction of Athens Water i.e., Athens Water and Lavipharm go up and down completely randomly.
Pair Corralation between Athens Water and Lavipharm
Assuming the 90 days trading horizon Athens Water Supply is expected to under-perform the Lavipharm. But the stock apears to be less risky and, when comparing its historical volatility, Athens Water Supply is 2.09 times less risky than Lavipharm. The stock trades about -0.02 of its potential returns per unit of risk. The Lavipharm SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Lavipharm SA on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Lavipharm SA or generate 97.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Athens Water Supply vs. Lavipharm SA
Performance |
| Timeline |
| Athens Water Supply |
| Lavipharm SA |
Athens Water and Lavipharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Athens Water and Lavipharm
The main advantage of trading using opposite Athens Water and Lavipharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Athens Water position performs unexpectedly, Lavipharm 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 Lavipharm will offset losses from the drop in Lavipharm's long position.| Athens Water vs. Hellenic Petroleum SA | Athens Water vs. Mytilineos SA | Athens Water vs. Hellenic Telecommunications Organization | Athens Water vs. Public Power |
| Lavipharm vs. Intertech SA Inter | Lavipharm vs. Optronics Technologies SA | Lavipharm vs. Profile Systems Software | Lavipharm vs. Thrace Plastics Holding |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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