Correlation Between Erste Group and Oil Terminal
Can any of the company-specific risk be diversified away by investing in both Erste Group and Oil Terminal 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 Oil Terminal 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 Oil Terminal C, you can compare the effects of market volatilities on Erste Group and Oil Terminal 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 Oil Terminal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Oil Terminal.
Diversification Opportunities for Erste Group and Oil Terminal
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Erste and Oil is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Oil Terminal C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Terminal C 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 Oil Terminal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Terminal C has no effect on the direction of Erste Group i.e., Erste Group and Oil Terminal go up and down completely randomly.
Pair Corralation between Erste Group and Oil Terminal
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.59 times more return on investment than Oil Terminal. However, Erste Group Bank is 1.7 times less risky than Oil Terminal. It trades about 0.14 of its potential returns per unit of risk. Oil Terminal C is currently generating about 0.01 per unit of risk. If you would invest 24,450 in Erste Group Bank on August 28, 2024 and sell it today you would earn a total of 1,040 from holding Erste Group Bank or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Oil Terminal C
Performance |
| Timeline |
| Erste Group Bank |
| Oil Terminal C |
Erste Group and Oil Terminal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Oil Terminal
The main advantage of trading using opposite Erste Group and Oil Terminal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Oil Terminal 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 Oil Terminal will offset losses from the drop in Oil Terminal'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 |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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