Correlation Between Prodea Real and Athens Water

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

By analyzing existing cross correlation between Prodea Real Estate and Athens Water Supply, you can compare the effects of market volatilities on Prodea Real and Athens Water 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 Prodea Real with a short position of Athens Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prodea Real and Athens Water.

Diversification Opportunities for Prodea Real and Athens Water

-0.35

Correlation Coefficient

Prodea Real  Athens Water

Very good diversification

The 3 months correlation between Prodea and Athens is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Prodea Real Estate and Athens Water Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athens Water Supply and Prodea Real 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 Prodea Real Estate are associated (or correlated) with Athens Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athens Water Supply has no effect on the direction of Prodea Real i.e., Prodea Real and Athens Water go up and down completely randomly.

Pair Corralation between Prodea Real and Athens Water

Assuming the 90 days trading horizon Prodea Real Estate is expected to under-perform the Athens Water. In addition to that, Prodea Real is 4.85 times more volatile than Athens Water Supply. It trades about 0.0 of its total potential returns per unit of risk. Athens Water Supply is currently generating about 0.11 per unit of volatility. If you would invest  564.00  in Athens Water Supply on September 5, 2024 and sell it today you would earn a total of  29.00  from holding Athens Water Supply or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Prodea Real Estate  vs.  Athens Water Supply

Prodea Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Athens Water Supply

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Athens Water Supply are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Athens Water is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prodea Real and Athens Water

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

The idea behind Prodea Real Estate and Athens Water Supply 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.