Correlation Between Hellenic Petroleum and Alumil Aluminium

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

By analyzing existing cross correlation between Hellenic Petroleum SA and Alumil Aluminium Industry, you can compare the effects of market volatilities on Hellenic Petroleum and Alumil Aluminium 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 Hellenic Petroleum with a short position of Alumil Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hellenic Petroleum and Alumil Aluminium.

Diversification Opportunities for Hellenic Petroleum and Alumil Aluminium

-0.69

Correlation Coefficient

Hellenic Petroleum  Alumil Aluminium

Excellent diversification

The 3 months correlation between Hellenic and Alumil is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hellenic Petroleum SA and Alumil Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumil Aluminium Industry and Hellenic Petroleum 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 Hellenic Petroleum SA are associated (or correlated) with Alumil Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumil Aluminium Industry has no effect on the direction of Hellenic Petroleum i.e., Hellenic Petroleum and Alumil Aluminium go up and down completely randomly.

Pair Corralation between Hellenic Petroleum and Alumil Aluminium

Assuming the 90 days trading horizon Hellenic Petroleum SA is expected to under-perform the Alumil Aluminium. But the stock apears to be less risky and, when comparing its historical volatility, Hellenic Petroleum SA is 1.8 times less risky than Alumil Aluminium. The stock trades about -0.04 of its potential returns per unit of risk. The Alumil Aluminium Industry is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  290.00  in Alumil Aluminium Industry on September 5, 2024 and sell it today you would earn a total of  110.00  from holding Alumil Aluminium Industry or generate 37.93% return on investment over 90 days.

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

Hellenic Petroleum SA  vs.  Alumil Aluminium Industry

Hellenic Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hellenic Petroleum SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hellenic Petroleum is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alumil Aluminium Industry

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alumil Aluminium Industry are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alumil Aluminium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hellenic Petroleum and Alumil Aluminium

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

The idea behind Hellenic Petroleum SA and Alumil Aluminium Industry 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.