Correlation Between CARSALES and Erste Group
Can any of the company-specific risk be diversified away by investing in both CARSALES 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 CARSALES and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Erste Group Bank, you can compare the effects of market volatilities on CARSALES 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 CARSALES with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and Erste Group.
Diversification Opportunities for CARSALES and Erste Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CARSALES and Erste is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM 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 CARSALES 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 CARSALESCOM 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 CARSALES i.e., CARSALES and Erste Group go up and down completely randomly.
Pair Corralation between CARSALES and Erste Group
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 1.36 times more return on investment than Erste Group. However, CARSALES is 1.36 times more volatile than Erste Group Bank. It trades about 0.29 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.08 per unit of risk. If you would invest 2,200 in CARSALESCOM on November 4, 2024 and sell it today you would earn a total of 240.00 from holding CARSALESCOM or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Erste Group Bank
Performance |
| Timeline |
| CARSALESCOM |
| Erste Group Bank |
CARSALES and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and Erste Group
The main advantage of trading using opposite CARSALES and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES 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.| CARSALES vs. Fast Retailing Co | CARSALES vs. FAST RETAIL ADR | CARSALES vs. SIDETRADE EO 1 | CARSALES vs. TRADEDOUBLER AB SK |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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