Correlation Between Erste Group and CARSALES
Can any of the company-specific risk be diversified away by investing in both Erste Group and CARSALES 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 CARSALES 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 CARSALESCOM, you can compare the effects of market volatilities on Erste Group and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and CARSALES.
Diversification Opportunities for Erste Group and CARSALES
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and CARSALES is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Erste Group i.e., Erste Group and CARSALES go up and down completely randomly.
Pair Corralation between Erste Group and CARSALES
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.76 times more return on investment than CARSALES. However, Erste Group Bank is 1.32 times less risky than CARSALES. It trades about 0.15 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.09 per unit of risk. If you would invest 3,075 in Erste Group Bank on October 24, 2024 and sell it today you would earn a total of 3,087 from holding Erste Group Bank or generate 100.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.23% |
| Values | Daily Returns |
Erste Group Bank vs. CARSALESCOM
Performance |
| Timeline |
| Erste Group Bank |
| CARSALESCOM |
Erste Group and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and CARSALES
The main advantage of trading using opposite Erste Group and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| Erste Group vs. NorAm Drilling AS | Erste Group vs. BORR DRILLING NEW | Erste Group vs. MagnaChip Semiconductor Corp | Erste Group vs. DAIDO METAL TD |
| CARSALES vs. Jupiter Fund Management | CARSALES vs. Corporate Travel Management | CARSALES vs. NORTHEAST UTILITIES | CARSALES vs. Canadian Utilities Limited |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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