Correlation Between Nippon Light and Erste Group
Can any of the company-specific risk be diversified away by investing in both Nippon Light 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 Nippon Light and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Light Metal and Erste Group Bank, you can compare the effects of market volatilities on Nippon Light 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 Nippon Light with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Light and Erste Group.
Diversification Opportunities for Nippon Light and Erste Group
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nippon and Erste is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Light Metal 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 Nippon Light 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 Nippon Light Metal 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 Nippon Light i.e., Nippon Light and Erste Group go up and down completely randomly.
Pair Corralation between Nippon Light and Erste Group
Assuming the 90 days horizon Nippon Light Metal is expected to under-perform the Erste Group. In addition to that, Nippon Light is 1.44 times more volatile than Erste Group Bank. It trades about -0.01 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.26 per unit of volatility. If you would invest 5,908 in Erste Group Bank on October 30, 2024 and sell it today you would earn a total of 322.00 from holding Erste Group Bank or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Light Metal vs. Erste Group Bank
Performance |
| Timeline |
| Nippon Light Metal |
| Erste Group Bank |
Nippon Light and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Light and Erste Group
The main advantage of trading using opposite Nippon Light and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Light 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.| Nippon Light vs. PICKN PAY STORES | Nippon Light vs. Apollo Medical Holdings | Nippon Light vs. SPARTAN STORES | Nippon Light vs. Peijia Medical Limited |
| Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc | Erste Group vs. Apple Inc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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