Correlation Between Mytilineos and Piraeus Financial

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

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

Diversification Opportunities for Mytilineos and Piraeus Financial

0.69

Correlation Coefficient

Mytilineos  Piraeus Financial

Poor diversification

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

Pair Corralation between Mytilineos and Piraeus Financial

Assuming the 90 days trading horizon Mytilineos is expected to generate 1.94 times less return on investment than Piraeus Financial. But when comparing it to its historical volatility, Mytilineos SA is 1.12 times less risky than Piraeus Financial. It trades about 0.01 of its potential returns per unit of risk. Piraeus Financial Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  388.00  in Piraeus Financial Holdings on September 13, 2024 and sell it today you would earn a total of  3.00  from holding Piraeus Financial Holdings or generate 0.77% return on investment over 90 days.

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

Mytilineos SA  vs.  Piraeus Financial Holdings

Mytilineos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mytilineos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mytilineos is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Piraeus Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Financial Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Piraeus Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mytilineos and Piraeus Financial

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

The idea behind Mytilineos SA and Piraeus Financial Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.