Correlation Between Hardide PLC and Erste Group
Can any of the company-specific risk be diversified away by investing in both Hardide PLC 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 Hardide PLC and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hardide PLC and Erste Group Bank, you can compare the effects of market volatilities on Hardide PLC 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 Hardide PLC with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hardide PLC and Erste Group.
Diversification Opportunities for Hardide PLC and Erste Group
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hardide and Erste is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hardide PLC 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 Hardide PLC 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 Hardide PLC 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 Hardide PLC i.e., Hardide PLC and Erste Group go up and down completely randomly.
Pair Corralation between Hardide PLC and Erste Group
Assuming the 90 days trading horizon Hardide PLC is expected to under-perform the Erste Group. In addition to that, Hardide PLC is 2.45 times more volatile than Erste Group Bank. It trades about -0.06 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 2, 2024 and sell it today you would earn a total of 2,206 from holding Erste Group Bank or generate 74.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hardide PLC vs. Erste Group Bank
Performance |
| Timeline |
| Hardide PLC |
| Erste Group Bank |
Hardide PLC and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hardide PLC and Erste Group
The main advantage of trading using opposite Hardide PLC and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hardide PLC 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.| Hardide PLC vs. Monster Beverage Corp | Hardide PLC vs. National Beverage Corp | Hardide PLC vs. Tyson Foods Cl | Hardide PLC vs. Premier Foods PLC |
| Erste Group vs. LPKF Laser Electronics | Erste Group vs. Associated British Foods | Erste Group vs. Hilton Food Group | Erste Group vs. Samsung Electronics Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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