Correlation Between Erste Group and Antibiotice

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

Diversification Opportunities for Erste Group and Antibiotice

-0.78

Correlation Coefficient

Erste Group  Antibiotice

Pay attention - limited upside

The 3 months correlation between Erste and Antibiotice is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Antibiotice Ia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antibiotice Ia 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 Antibiotice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antibiotice Ia has no effect on the direction of Erste Group i.e., Erste Group and Antibiotice go up and down completely randomly.

Pair Corralation between Erste Group and Antibiotice

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 1.68 times more return on investment than Antibiotice. However, Erste Group is 1.68 times more volatile than Antibiotice Ia. It trades about 0.12 of its potential returns per unit of risk. Antibiotice Ia is currently generating about -0.15 per unit of risk. If you would invest  29,400  in Erste Group Bank on December 24, 2024 and sell it today you would earn a total of  4,090  from holding Erste Group Bank or generate 13.91% return on investment over 90 days.

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

Erste Group Bank  vs.  Antibiotice Ia

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 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Erste Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Antibiotice Ia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Antibiotice Ia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Erste Group and Antibiotice

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

The idea behind Erste Group Bank and Antibiotice Ia 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.