Correlation Between Piraeus Financial and Optima Bank
Can any of the company-specific risk be diversified away by investing in both Piraeus Financial and Optima Bank 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 Optima Bank 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 Optima bank SA, you can compare the effects of market volatilities on Piraeus Financial and Optima Bank 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 Optima Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piraeus Financial and Optima Bank.
Diversification Opportunities for Piraeus Financial and Optima Bank
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Piraeus and Optima is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Financial Holdings and Optima bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima bank 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 Optima Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima bank SA has no effect on the direction of Piraeus Financial i.e., Piraeus Financial and Optima Bank go up and down completely randomly.
Pair Corralation between Piraeus Financial and Optima Bank
Assuming the 90 days trading horizon Piraeus Financial is expected to generate 1.62 times less return on investment than Optima Bank. In addition to that, Piraeus Financial is 1.47 times more volatile than Optima bank SA. It trades about 0.06 of its total potential returns per unit of risk. Optima bank SA is currently generating about 0.15 per unit of volatility. If you would invest 696.00 in Optima bank SA on August 27, 2024 and sell it today you would earn a total of 576.00 from holding Optima bank SA or generate 82.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.89% |
| Values | Daily Returns |
Piraeus Financial Holdings vs. Optima bank SA
Performance |
| Timeline |
| Piraeus Financial |
| Optima bank SA |
Piraeus Financial and Optima Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Piraeus Financial and Optima Bank
The main advantage of trading using opposite Piraeus Financial and Optima Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Piraeus Financial position performs unexpectedly, Optima Bank 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 Optima Bank will offset losses from the drop in Optima Bank's long position.| Piraeus Financial vs. Alpha Services and | Piraeus Financial vs. EL D Mouzakis | Piraeus Financial vs. Lampsa Hellenic Hotels | Piraeus Financial vs. Eurobank Ergasias Services |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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