Correlation Between Erste Group and Beeks Trading

Can any of the company-specific risk be diversified away by investing in both Erste Group and Beeks Trading 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 Erste Group and Beeks Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Erste Group Bank and Beeks Trading, you can compare the effects of market volatilities on Erste Group and Beeks Trading 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 Erste Group with a short position of Beeks Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Beeks Trading.

Diversification Opportunities for Erste Group and Beeks Trading

0.41

Correlation Coefficient

Erste Group  Beeks Trading

Very weak diversification

The 3 months correlation between Erste and Beeks is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Beeks Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beeks Trading and Erste Group 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 Erste Group Bank are associated (or correlated) with Beeks Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beeks Trading has no effect on the direction of Erste Group i.e., Erste Group and Beeks Trading go up and down completely randomly.

Pair Corralation between Erste Group and Beeks Trading

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.35 times more return on investment than Beeks Trading. However, Erste Group Bank is 2.85 times less risky than Beeks Trading. It trades about 0.13 of its potential returns per unit of risk. Beeks Trading is currently generating about 0.03 per unit of risk. If you would invest  4,820  in Erste Group Bank on September 4, 2024 and sell it today you would earn a total of  434.00  from holding Erste Group Bank or generate 9.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Erste Group Bank  vs.  Beeks Trading

Erste Group Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Erste Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Beeks Trading

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beeks Trading are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Beeks Trading is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Erste Group and Beeks Trading

The main advantage of trading using opposite Erste Group and Beeks Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Beeks Trading 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 Beeks Trading will offset losses from the drop in Beeks Trading's long position.

The idea behind Erste Group Bank and Beeks Trading pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..