Correlation Between Piraeus Bank and Commerzbank

Can any of the company-specific risk be diversified away by investing in both Piraeus Bank and Commerzbank 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 Commerzbank 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 Commerzbank AG PK, you can compare the effects of market volatilities on Piraeus Bank and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piraeus Bank and Commerzbank.

Diversification Opportunities for Piraeus Bank and Commerzbank

-0.24

Correlation Coefficient

Piraeus Bank  Commerzbank

Very good diversification

The 3 months correlation between Piraeus and Commerzbank is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Piraeus Bank SA and Commerzbank AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG PK 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG PK has no effect on the direction of Piraeus Bank i.e., Piraeus Bank and Commerzbank go up and down completely randomly.

Pair Corralation between Piraeus Bank and Commerzbank

Assuming the 90 days horizon Piraeus Bank SA is expected to generate 1.85 times more return on investment than Commerzbank. However, Piraeus Bank is 1.85 times more volatile than Commerzbank AG PK. It trades about 0.07 of its potential returns per unit of risk. Commerzbank AG PK is currently generating about 0.07 per unit of risk. If you would invest  139.00  in Piraeus Bank SA on September 4, 2024 and sell it today you would earn a total of  245.00  from holding Piraeus Bank SA or generate 176.26% return on investment over 90 days.

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

Piraeus Bank SA  vs.  Commerzbank AG PK

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Commerzbank AG PK

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Commerzbank AG PK are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Commerzbank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Piraeus Bank and Commerzbank

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

The idea behind Piraeus Bank SA and Commerzbank AG PK 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 Stocks Directory module to find actively traded stocks across global markets.