Correlation Between Erste Group and AROBS TRANSILVANIA
Can any of the company-specific risk be diversified away by investing in both Erste Group and AROBS TRANSILVANIA 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 AROBS TRANSILVANIA 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 AROBS TRANSILVANIA SOFTWARE, you can compare the effects of market volatilities on Erste Group and AROBS TRANSILVANIA 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 AROBS TRANSILVANIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and AROBS TRANSILVANIA.
Diversification Opportunities for Erste Group and AROBS TRANSILVANIA
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Erste and AROBS is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and AROBS TRANSILVANIA SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AROBS TRANSILVANIA 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 AROBS TRANSILVANIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AROBS TRANSILVANIA has no effect on the direction of Erste Group i.e., Erste Group and AROBS TRANSILVANIA go up and down completely randomly.
Pair Corralation between Erste Group and AROBS TRANSILVANIA
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 1.7 times more return on investment than AROBS TRANSILVANIA. However, Erste Group is 1.7 times more volatile than AROBS TRANSILVANIA SOFTWARE. It trades about 0.2 of its potential returns per unit of risk. AROBS TRANSILVANIA SOFTWARE is currently generating about -0.72 per unit of risk. If you would invest 24,450 in Erste Group Bank on August 27, 2024 and sell it today you would earn a total of 1,480 from holding Erste Group Bank or generate 6.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Erste Group Bank vs. AROBS TRANSILVANIA SOFTWARE
Performance |
| Timeline |
| Erste Group Bank |
| AROBS TRANSILVANIA |
Erste Group and AROBS TRANSILVANIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and AROBS TRANSILVANIA
The main advantage of trading using opposite Erste Group and AROBS TRANSILVANIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, AROBS TRANSILVANIA 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 AROBS TRANSILVANIA will offset losses from the drop in AROBS TRANSILVANIA's long position.| Erste Group vs. AROBS TRANSILVANIA SOFTWARE | Erste Group vs. Biofarm Bucure | Erste Group vs. Digi Communications NV | Erste Group vs. GRUPUL INDUSTRIAL ELECTROCONTACT |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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