Correlation Between SAB Finance and Erste Group
Can any of the company-specific risk be diversified away by investing in both SAB Finance 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 SAB Finance and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAB Finance as and Erste Group Bank, you can compare the effects of market volatilities on SAB Finance 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 SAB Finance with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAB Finance and Erste Group.
Diversification Opportunities for SAB Finance and Erste Group
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SAB and Erste is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SAB Finance as 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 SAB Finance 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 SAB Finance as 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 SAB Finance i.e., SAB Finance and Erste Group go up and down completely randomly.
Pair Corralation between SAB Finance and Erste Group
Assuming the 90 days trading horizon SAB Finance as is expected to under-perform the Erste Group. But the stock apears to be less risky and, when comparing its historical volatility, SAB Finance as is 2.03 times less risky than Erste Group. The stock trades about -0.07 of its potential returns per unit of risk. The Erste Group Bank is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 125,600 in Erste Group Bank on August 27, 2024 and sell it today you would earn a total of 6,100 from holding Erste Group Bank or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAB Finance as vs. Erste Group Bank
Performance |
| Timeline |
| SAB Finance as |
| Erste Group Bank |
SAB Finance and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAB Finance and Erste Group
The main advantage of trading using opposite SAB Finance and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAB Finance 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.| SAB Finance vs. Erste Group Bank | SAB Finance vs. Moneta Money Bank | SAB Finance vs. Vienna Insurance Group | SAB Finance vs. JT ARCH INVESTMENTS |
| Erste Group vs. Moneta Money Bank | Erste Group vs. UNIQA Insurance Group | Erste Group vs. Komercni Banka AS | Erste Group vs. Vienna Insurance Group |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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