Correlation Between GRUPUL INDUSTRIAL and Erste Group
Can any of the company-specific risk be diversified away by investing in both GRUPUL INDUSTRIAL 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 GRUPUL INDUSTRIAL and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GRUPUL INDUSTRIAL ELECTROCONTACT and Erste Group Bank, you can compare the effects of market volatilities on GRUPUL INDUSTRIAL 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 GRUPUL INDUSTRIAL with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPUL INDUSTRIAL and Erste Group.
Diversification Opportunities for GRUPUL INDUSTRIAL and Erste Group
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GRUPUL and Erste is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GRUPUL INDUSTRIAL ELECTROCONTA 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 GRUPUL INDUSTRIAL 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 GRUPUL INDUSTRIAL ELECTROCONTACT 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 GRUPUL INDUSTRIAL i.e., GRUPUL INDUSTRIAL and Erste Group go up and down completely randomly.
Pair Corralation between GRUPUL INDUSTRIAL and Erste Group
Assuming the 90 days trading horizon GRUPUL INDUSTRIAL ELECTROCONTACT is expected to generate 1.91 times more return on investment than Erste Group. However, GRUPUL INDUSTRIAL is 1.91 times more volatile than Erste Group Bank. It trades about 0.18 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.27 per unit of risk. If you would invest 3.50 in GRUPUL INDUSTRIAL ELECTROCONTACT on September 15, 2024 and sell it today you would earn a total of 1.00 from holding GRUPUL INDUSTRIAL ELECTROCONTACT or generate 28.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
GRUPUL INDUSTRIAL ELECTROCONTA vs. Erste Group Bank
Performance |
Timeline |
GRUPUL INDUSTRIAL |
Erste Group Bank |
GRUPUL INDUSTRIAL and Erste Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GRUPUL INDUSTRIAL and Erste Group
The main advantage of trading using opposite GRUPUL INDUSTRIAL and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRUPUL INDUSTRIAL 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.GRUPUL INDUSTRIAL vs. TRANSILVANIA LEASING SI | GRUPUL INDUSTRIAL vs. Infinity Capital Investments | GRUPUL INDUSTRIAL vs. TRANSILVANIA INVESTMENTS ALLIANCE | GRUPUL INDUSTRIAL vs. Digi Communications NV |
Erste Group vs. Compania Hoteliera InterContinental | Erste Group vs. Evergent Investments SA | Erste Group vs. Infinity Capital Investments | Erste Group vs. IHUNT TECHNOLOGY IMPORT EXPORT |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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