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
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Digi and Erste is 0.33. 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 generate 0.95 times more return on investment than Erste Group. However, Digi Communications NV is 1.05 times less risky than Erste Group. It trades about 0.12 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.09 per unit of risk. If you would invest 3,203 in Digi Communications NV on November 5, 2024 and sell it today you would earn a total of 3,257 from holding Digi Communications NV or generate 101.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| 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.| Digi Communications vs. Turism Hotelur | Digi Communications vs. Erste Group Bank | Digi Communications vs. TRANSILVANIA INVESTMENTS ALLIANCE | Digi Communications vs. Evergent Investments SA |
| Erste Group vs. Digi Communications NV | Erste Group vs. Turism Hotelur | Erste Group vs. Infinity Capital Investments | Erste Group vs. AROBS TRANSILVANIA SOFTWARE |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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