Correlation Between Erste Group and BKS Bank
Can any of the company-specific risk be diversified away by investing in both Erste Group and BKS Bank 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 BKS Bank 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 BKS Bank AG, you can compare the effects of market volatilities on Erste Group and BKS Bank 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 BKS Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and BKS Bank.
Diversification Opportunities for Erste Group and BKS Bank
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erste and BKS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and BKS Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKS Bank AG 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 BKS Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKS Bank AG has no effect on the direction of Erste Group i.e., Erste Group and BKS Bank go up and down completely randomly.
Pair Corralation between Erste Group and BKS Bank
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.53 times more return on investment than BKS Bank. However, Erste Group Bank is 1.9 times less risky than BKS Bank. It trades about 0.23 of its potential returns per unit of risk. BKS Bank AG is currently generating about -0.03 per unit of risk. If you would invest 5,912 in Erste Group Bank on October 24, 2024 and sell it today you would earn a total of 250.00 from holding Erste Group Bank or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. BKS Bank AG
Performance |
| Timeline |
| Erste Group Bank |
| BKS Bank AG |
Erste Group and BKS Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and BKS Bank
The main advantage of trading using opposite Erste Group and BKS Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, BKS Bank 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 BKS Bank will offset losses from the drop in BKS Bank's long position.| Erste Group vs. Raiffeisen Bank International | Erste Group vs. OMV Aktiengesellschaft | Erste Group vs. Voestalpine AG | Erste Group vs. Vienna Insurance Group |
| BKS Bank vs. Erste Group Bank | BKS Bank vs. Raiffeisen Bank International | BKS Bank vs. Universal Music Group | BKS Bank vs. UNIQA Insurance Group |
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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