Correlation Between Hansa Investment and Erste Group
Can any of the company-specific risk be diversified away by investing in both Hansa Investment and Erste Group 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 Hansa Investment and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansa Investment and Erste Group Bank, you can compare the effects of market volatilities on Hansa Investment and Erste Group 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 Hansa Investment with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansa Investment and Erste Group.
Diversification Opportunities for Hansa Investment and Erste Group
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hansa and Erste is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank and Hansa Investment 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 Hansa Investment are associated (or correlated) with Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Hansa Investment i.e., Hansa Investment and Erste Group go up and down completely randomly.
Pair Corralation between Hansa Investment and Erste Group
Assuming the 90 days trading horizon Hansa Investment is expected to generate 2.29 times less return on investment than Erste Group. In addition to that, Hansa Investment is 1.24 times more volatile than Erste Group Bank. It trades about 0.04 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.12 per unit of volatility. If you would invest 2,975 in Erste Group Bank on September 4, 2024 and sell it today you would earn a total of 2,279 from holding Erste Group Bank or generate 76.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hansa Investment vs. Erste Group Bank
Performance |
| Timeline |
| Hansa Investment |
| Erste Group Bank |
Hansa Investment and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansa Investment and Erste Group
The main advantage of trading using opposite Hansa Investment and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansa Investment position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Hansa Investment vs. CATCo Reinsurance Opportunities | Hansa Investment vs. Fair Oaks Income | Hansa Investment vs. Legal General Group | Hansa Investment vs. Intermediate Capital Group |
| Erste Group vs. Samsung Electronics Co | Erste Group vs. Samsung Electronics Co | Erste Group vs. Hyundai Motor | Erste Group vs. Toyota Motor Corp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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