Correlation Between Erste Group and Fukuyama Transporting
Can any of the company-specific risk be diversified away by investing in both Erste Group and Fukuyama Transporting 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 Fukuyama Transporting 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 Fukuyama Transporting Co, you can compare the effects of market volatilities on Erste Group and Fukuyama Transporting 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 Fukuyama Transporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Fukuyama Transporting.
Diversification Opportunities for Erste Group and Fukuyama Transporting
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and Fukuyama is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Fukuyama Transporting Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fukuyama Transporting 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 Fukuyama Transporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fukuyama Transporting has no effect on the direction of Erste Group i.e., Erste Group and Fukuyama Transporting go up and down completely randomly.
Pair Corralation between Erste Group and Fukuyama Transporting
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.66 times more return on investment than Fukuyama Transporting. However, Erste Group Bank is 1.52 times less risky than Fukuyama Transporting. It trades about 0.26 of its potential returns per unit of risk. Fukuyama Transporting Co is currently generating about -0.03 per unit of risk. If you would invest 4,958 in Erste Group Bank on October 14, 2024 and sell it today you would earn a total of 1,066 from holding Erste Group Bank or generate 21.5% 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. Fukuyama Transporting Co
Performance |
| Timeline |
| Erste Group Bank |
| Fukuyama Transporting |
Erste Group and Fukuyama Transporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Fukuyama Transporting
The main advantage of trading using opposite Erste Group and Fukuyama Transporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Fukuyama Transporting 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 Fukuyama Transporting will offset losses from the drop in Fukuyama Transporting's long position.| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
| Fukuyama Transporting vs. Synovus Financial Corp | Fukuyama Transporting vs. Erste Group Bank | Fukuyama Transporting vs. Suntory Beverage Food | Fukuyama Transporting vs. The Boston Beer |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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