Correlation Between Erste Group and Palfinger
Can any of the company-specific risk be diversified away by investing in both Erste Group and Palfinger 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 Palfinger 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 Palfinger AG, you can compare the effects of market volatilities on Erste Group and Palfinger 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 Palfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Palfinger.
Diversification Opportunities for Erste Group and Palfinger
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Erste and Palfinger is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Palfinger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palfinger 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 Palfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palfinger AG has no effect on the direction of Erste Group i.e., Erste Group and Palfinger go up and down completely randomly.
Pair Corralation between Erste Group and Palfinger
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 1.11 times more return on investment than Palfinger. However, Erste Group is 1.11 times more volatile than Palfinger AG. It trades about 0.09 of its potential returns per unit of risk. Palfinger AG is currently generating about -0.13 per unit of risk. If you would invest 4,447 in Erste Group Bank on August 24, 2024 and sell it today you would earn a total of 753.00 from holding Erste Group Bank or generate 16.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Palfinger AG
Performance |
| Timeline |
| Erste Group Bank |
| Palfinger AG |
Erste Group and Palfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Palfinger
The main advantage of trading using opposite Erste Group and Palfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Palfinger 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 Palfinger will offset losses from the drop in Palfinger'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 |
| Palfinger vs. RATH Aktiengesellschaft | Palfinger vs. AT S Austria | Palfinger vs. BAWAG Group AG | Palfinger vs. Semperit Aktiengesellschaft Holding |
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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