Correlation Between Bank Central and Erste Group
Can any of the company-specific risk be diversified away by investing in both Bank Central 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 Bank Central and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Erste Group Bank, you can compare the effects of market volatilities on Bank Central 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 Bank Central with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Erste Group.
Diversification Opportunities for Bank Central and Erste Group
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Erste is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia 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 Bank Central 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 Bank Central Asia 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 Bank Central i.e., Bank Central and Erste Group go up and down completely randomly.
Pair Corralation between Bank Central and Erste Group
Assuming the 90 days horizon Bank Central Asia is expected to under-perform the Erste Group. In addition to that, Bank Central is 1.24 times more volatile than Erste Group Bank. It trades about -0.07 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.16 per unit of volatility. If you would invest 3,072 in Erste Group Bank on October 25, 2024 and sell it today you would earn a total of 127.00 from holding Erste Group Bank or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Bank Central Asia vs. Erste Group Bank
Performance |
| Timeline |
| Bank Central Asia |
| Erste Group Bank |
Bank Central and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Erste Group
The main advantage of trading using opposite Bank Central and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central 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.| Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
| Erste Group vs. DBS Group Holdings | Erste Group vs. Swedbank AB | Erste Group vs. United Overseas Bank | Erste Group vs. Bank Mandiri Persero |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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