Correlation Between Piraeus Bank and Bankinter

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

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

Diversification Opportunities for Piraeus Bank and Bankinter

0.76

Correlation Coefficient

Piraeus Bank  Bankinter

Poor diversification

The 3 months correlation between Piraeus and Bankinter is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Bank SA and Bankinter SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA ADR and Piraeus 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 Piraeus Bank SA are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA ADR has no effect on the direction of Piraeus Bank i.e., Piraeus Bank and Bankinter go up and down completely randomly.

Pair Corralation between Piraeus Bank and Bankinter

Assuming the 90 days horizon Piraeus Bank SA is expected to under-perform the Bankinter. But the pink sheet apears to be less risky and, when comparing its historical volatility, Piraeus Bank SA is 1.13 times less risky than Bankinter. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Bankinter SA ADR is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  887.00  in Bankinter SA ADR on August 31, 2024 and sell it today you would lose (102.00) from holding Bankinter SA ADR or give up 11.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Piraeus Bank SA  vs.  Bankinter SA ADR

Piraeus Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piraeus Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly 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.

Bankinter SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bankinter SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Piraeus Bank and Bankinter

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

The idea behind Piraeus Bank SA and Bankinter SA ADR 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.