Correlation Between Erste Group and Feper SA

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

Diversification Opportunities for Erste Group and Feper SA

0.69

Correlation Coefficient

Erste Group  Feper SA

Poor diversification

The 3 months correlation between Erste and Feper is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Feper SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feper SA 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 Feper SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feper SA has no effect on the direction of Erste Group i.e., Erste Group and Feper SA go up and down completely randomly.

Pair Corralation between Erste Group and Feper SA

Assuming the 90 days trading horizon Erste Group is expected to generate 1.44 times less return on investment than Feper SA. But when comparing it to its historical volatility, Erste Group Bank is 4.1 times less risky than Feper SA. It trades about 0.12 of its potential returns per unit of risk. Feper SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Feper SA on September 12, 2024 and sell it today you would earn a total of  6.00  from holding Feper SA or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.72%
Values	Daily Returns

Erste Group Bank  vs.  Feper SA

Erste Group Bank

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 16 (%) 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.

Feper SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Feper SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Feper SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erste Group and Feper SA

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

The idea behind Erste Group Bank and Feper SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.