Correlation Between Digi Communications and Erste Group
Can any of the company-specific risk be diversified away by investing in both Digi Communications 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 Digi Communications and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi Communications NV and Erste Group Bank, you can compare the effects of market volatilities on Digi Communications 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 Digi Communications with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi Communications and Erste Group.
Diversification Opportunities for Digi Communications and Erste Group
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digi and Erste is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Digi Communications NV 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 Digi Communications 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 Digi Communications NV 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 Digi Communications i.e., Digi Communications and Erste Group go up and down completely randomly.
Pair Corralation between Digi Communications and Erste Group
Assuming the 90 days trading horizon Digi Communications NV is expected to under-perform the Erste Group. But the stock apears to be less risky and, when comparing its historical volatility, Digi Communications NV is 1.3 times less risky than Erste Group. The stock trades about -0.01 of its potential returns per unit of risk. The Erste Group Bank is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 24,450 in Erste Group Bank on August 29, 2024 and sell it today you would earn a total of 1,350 from holding Erste Group Bank or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi Communications NV vs. Erste Group Bank
Performance |
| Timeline |
| Digi Communications |
| Erste Group Bank |
Digi Communications and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi Communications and Erste Group
The main advantage of trading using opposite Digi Communications and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi Communications 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.The idea behind Digi Communications NV and Erste Group Bank 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.| Erste Group vs. TRANSILVANIA INVESTMENTS ALLIANCE | Erste Group vs. IHUNT TECHNOLOGY IMPORT EXPORT | Erste Group vs. Biofarm Bucure | Erste Group vs. Compania Hoteliera InterContinental |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |