Correlation Between PT Bank and Eurobank Ergasias

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

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

Diversification Opportunities for PT Bank and Eurobank Ergasias

0.79

Correlation Coefficient

PT Bank  Eurobank Ergasias

Poor diversification

The 3 months correlation between BKRKF and Eurobank is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias and PT Bank 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 PT Bank Rakyat 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 PT Bank i.e., PT Bank and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between PT Bank and Eurobank Ergasias

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Eurobank Ergasias. In addition to that, PT Bank is 9.32 times more volatile than Eurobank Ergasias Services. It trades about -0.07 of its total potential returns per unit of risk. Eurobank Ergasias Services is currently generating about -0.19 per unit of volatility. If you would invest  225.00  in Eurobank Ergasias Services on September 2, 2024 and sell it today you would lose (16.00) from holding Eurobank Ergasias Services or give up 7.11% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Eurobank Ergasias Services

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat 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 forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eurobank Ergasias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurobank Ergasias Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PT Bank and Eurobank Ergasias

The main advantage of trading using opposite PT Bank and Eurobank Ergasias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Rakyat 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.