Correlation Between Erste Group and FORMA SA

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

Diversification Opportunities for Erste Group and FORMA SA

0.0

Correlation Coefficient

Erste Group  FORMA SA

Pay attention - limited upside

The 3 months correlation between Erste and FORMA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and FORMA SA BOTOSANI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMA SA BOTOSANI 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 FORMA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMA SA BOTOSANI has no effect on the direction of Erste Group i.e., Erste Group and FORMA SA go up and down completely randomly.

Pair Corralation between Erste Group and FORMA SA

If you would invest  23,830  in Erste Group Bank on September 25, 2024 and sell it today you would earn a total of  5,620  from holding Erste Group Bank or generate 23.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Erste Group Bank  vs.  FORMA SA BOTOSANI

Erste Group Bank

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 22 (%) 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.

FORMA SA BOTOSANI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORMA SA BOTOSANI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, FORMA SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Erste Group and FORMA SA

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

The idea behind Erste Group Bank and FORMA SA BOTOSANI 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..