Correlation Between Erste Group and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both Erste Group and Tianjin Capital 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 Tianjin Capital 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 Tianjin Capital Environmental, you can compare the effects of market volatilities on Erste Group and Tianjin Capital 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 Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Tianjin Capital.
Diversification Opportunities for Erste Group and Tianjin Capital
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erste and Tianjin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Erste Group i.e., Erste Group and Tianjin Capital go up and down completely randomly.
Pair Corralation between Erste Group and Tianjin Capital
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.73 times more return on investment than Tianjin Capital. However, Erste Group Bank is 1.37 times less risky than Tianjin Capital. It trades about 0.43 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.05 per unit of risk. If you would invest 5,218 in Erste Group Bank on October 30, 2024 and sell it today you would earn a total of 1,012 from holding Erste Group Bank or generate 19.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Tianjin Capital Environmental
Performance |
| Timeline |
| Erste Group Bank |
| Tianjin Capital Envi |
Erste Group and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Tianjin Capital
The main advantage of trading using opposite Erste Group and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Tianjin Capital 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 Tianjin Capital will offset losses from the drop in Tianjin Capital's long position.| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
| Tianjin Capital vs. The Trade Desk | Tianjin Capital vs. CanSino Biologics | Tianjin Capital vs. TRADELINK ELECTRON | Tianjin Capital vs. Carsales |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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