Correlation Between Erste Group and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both Erste Group and Titan Machinery 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 Erste Group and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Titan Machinery, you can compare the effects of market volatilities on Erste Group and Titan Machinery 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 Erste Group with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Titan Machinery.
Diversification Opportunities for Erste Group and Titan Machinery
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and Titan is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and Erste Group 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 Erste Group Bank are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Erste Group i.e., Erste Group and Titan Machinery go up and down completely randomly.
Pair Corralation between Erste Group and Titan Machinery
Assuming the 90 days trading horizon Erste Group is expected to generate 1.32 times less return on investment than Titan Machinery. But when comparing it to its historical volatility, Erste Group Bank is 2.55 times less risky than Titan Machinery. It trades about 0.24 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,250 in Titan Machinery on November 1, 2024 and sell it today you would earn a total of 400.00 from holding Titan Machinery or generate 32.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Titan Machinery
Performance |
| Timeline |
| Erste Group Bank |
| Titan Machinery |
Erste Group and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Titan Machinery
The main advantage of trading using opposite Erste Group and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| Erste Group vs. Semiconductor Manufacturing International | Erste Group vs. Telecom Argentina SA | Erste Group vs. Tower Semiconductor | Erste Group vs. Magnachip Semiconductor |
| Titan Machinery vs. INTER CARS SA | Titan Machinery vs. ARROW ELECTRONICS | Titan Machinery vs. Nanjing Panda Electronics | Titan Machinery vs. LPKF Laser Electronics |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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