Correlation Between Erste Group and ALBIS LEASING

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

Diversification Opportunities for Erste Group and ALBIS LEASING

0.31

Correlation Coefficient

Erste Group  ALBIS LEASING

Weak diversification

The 3 months correlation between Erste and ALBIS is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and ALBIS LEASING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALBIS LEASING AG 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 ALBIS LEASING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALBIS LEASING AG has no effect on the direction of Erste Group i.e., Erste Group and ALBIS LEASING go up and down completely randomly.

Pair Corralation between Erste Group and ALBIS LEASING

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 3.82 times more return on investment than ALBIS LEASING. However, Erste Group is 3.82 times more volatile than ALBIS LEASING AG. It trades about 0.1 of its potential returns per unit of risk. ALBIS LEASING AG is currently generating about -0.04 per unit of risk. If you would invest  5,948  in Erste Group Bank on December 22, 2024 and sell it today you would earn a total of  796.00  from holding Erste Group Bank or generate 13.38% return on investment over 90 days.

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

Erste Group Bank  vs.  ALBIS LEASING AG

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.

ALBIS LEASING AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALBIS LEASING AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, ALBIS LEASING is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Erste Group and ALBIS LEASING

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

The idea behind Erste Group Bank and ALBIS LEASING AG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.