Correlation Between STRAITS TRADG and Erste Group
Can any of the company-specific risk be diversified away by investing in both STRAITS TRADG 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 STRAITS TRADG and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRAITS TRADG SD and Erste Group Bank, you can compare the effects of market volatilities on STRAITS TRADG 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 STRAITS TRADG with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAITS TRADG and Erste Group.
Diversification Opportunities for STRAITS TRADG and Erste Group
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STRAITS and Erste is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding STRAITS TRADG SD 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 STRAITS TRADG 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 STRAITS TRADG SD 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 STRAITS TRADG i.e., STRAITS TRADG and Erste Group go up and down completely randomly.
Pair Corralation between STRAITS TRADG and Erste Group
Assuming the 90 days horizon STRAITS TRADG SD is expected to under-perform the Erste Group. But the stock apears to be less risky and, when comparing its historical volatility, STRAITS TRADG SD is 1.04 times less risky than Erste Group. The stock trades about -0.04 of its potential returns per unit of risk. The Erste Group Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,161 in Erste Group Bank on November 1, 2024 and sell it today you would earn a total of 2,957 from holding Erste Group Bank or generate 93.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
STRAITS TRADG SD vs. Erste Group Bank
Performance |
| Timeline |
| STRAITS TRADG SD |
| Erste Group Bank |
STRAITS TRADG and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRAITS TRADG and Erste Group
The main advantage of trading using opposite STRAITS TRADG and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAITS TRADG 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.| STRAITS TRADG vs. Eurasia Mining Plc | STRAITS TRADG vs. OURGAME INTHOLDL 00005 | STRAITS TRADG vs. Corsair Gaming | STRAITS TRADG vs. Endeavour Mining PLC |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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