Correlation Between Alfa Financial and Erste Group
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Erste Group 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 Alfa Financial and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and Erste Group Bank, you can compare the effects of market volatilities on Alfa Financial and Erste Group 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 Alfa Financial with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Erste Group.
Diversification Opportunities for Alfa Financial and Erste Group
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alfa and Erste is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Alfa Financial 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 Alfa Financial Software are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Alfa Financial i.e., Alfa Financial and Erste Group go up and down completely randomly.
Pair Corralation between Alfa Financial and Erste Group
Assuming the 90 days trading horizon Alfa Financial is expected to generate 21.5 times less return on investment than Erste Group. In addition to that, Alfa Financial is 1.42 times more volatile than Erste Group Bank. It trades about 0.01 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.22 per unit of volatility. If you would invest 5,775 in Erste Group Bank on November 2, 2024 and sell it today you would earn a total of 276.00 from holding Erste Group Bank or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Erste Group Bank
Performance |
| Timeline |
| Alfa Financial Software |
| Erste Group Bank |
Alfa Financial and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Erste Group
The main advantage of trading using opposite Alfa Financial and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Alfa Financial vs. Pan American Silver | Alfa Financial vs. Micron Technology | Alfa Financial vs. Atalaya Mining | Alfa Financial vs. Beowulf Mining |
| Erste Group vs. Chrysalis Investments | Erste Group vs. Ubisoft Entertainment | Erste Group vs. Odfjell Drilling | Erste Group vs. BlackRock Frontiers Investment |
Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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