Correlation Between Erste Group and Photon Energy
Can any of the company-specific risk be diversified away by investing in both Erste Group and Photon Energy 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 Photon Energy 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 Photon Energy NV, you can compare the effects of market volatilities on Erste Group and Photon Energy 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 Photon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Photon Energy.
Diversification Opportunities for Erste Group and Photon Energy
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Erste and Photon is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Photon Energy NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photon Energy NV 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 Photon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photon Energy NV has no effect on the direction of Erste Group i.e., Erste Group and Photon Energy go up and down completely randomly.
Pair Corralation between Erste Group and Photon Energy
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.76 times more return on investment than Photon Energy. However, Erste Group Bank is 1.31 times less risky than Photon Energy. It trades about 0.11 of its potential returns per unit of risk. Photon Energy NV is currently generating about -0.1 per unit of risk. If you would invest 67,663 in Erste Group Bank on September 4, 2024 and sell it today you would earn a total of 63,837 from holding Erste Group Bank or generate 94.35% 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. Photon Energy NV
Performance |
| Timeline |
| Erste Group Bank |
| Photon Energy NV |
Erste Group and Photon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Photon Energy
The main advantage of trading using opposite Erste Group and Photon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Photon Energy 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 Photon Energy will offset losses from the drop in Photon Energy's long position.| Erste Group vs. UNIQA Insurance Group | Erste Group vs. Komercni Banka AS | Erste Group vs. JT ARCH INVESTMENTS |
| Photon Energy vs. Cez AS | Photon Energy vs. MT 1997 AS | Photon Energy vs. Kofola CeskoSlovensko as | Photon Energy vs. HARDWARIO as |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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