Correlation Between Erste Group and Judges Scientific

Can any of the company-specific risk be diversified away by investing in both Erste Group and Judges Scientific 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 Judges Scientific 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 Judges Scientific Plc, you can compare the effects of market volatilities on Erste Group and Judges Scientific 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 Judges Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Judges Scientific.

Diversification Opportunities for Erste Group and Judges Scientific

-0.09

Correlation Coefficient

Erste Group  Judges Scientific

Good diversification

The 3 months correlation between Erste and Judges is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Judges Scientific Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Judges Scientific Plc 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 Judges Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Judges Scientific Plc has no effect on the direction of Erste Group i.e., Erste Group and Judges Scientific go up and down completely randomly.

Pair Corralation between Erste Group and Judges Scientific

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 1.02 times more return on investment than Judges Scientific. However, Erste Group is 1.02 times more volatile than Judges Scientific Plc. It trades about 0.11 of its potential returns per unit of risk. Judges Scientific Plc is currently generating about -0.09 per unit of risk. If you would invest  5,884  in Erste Group Bank on December 21, 2024 and sell it today you would earn a total of  847.00  from holding Erste Group Bank or generate 14.39% return on investment over 90 days.

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

Erste Group Bank  vs.  Judges Scientific Plc

Erste Group Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Erste Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Judges Scientific Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Judges Scientific Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Erste Group and Judges Scientific

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

The idea behind Erste Group Bank and Judges Scientific Plc 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.