Correlation Between Erste Group and Turism Felix

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

Diversification Opportunities for Erste Group and Turism Felix

0.81

Correlation Coefficient

Erste Group  Turism Felix

Very poor diversification

The 3 months correlation between Erste and Turism is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Turism Felix B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turism Felix B 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 Turism Felix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turism Felix B has no effect on the direction of Erste Group i.e., Erste Group and Turism Felix go up and down completely randomly.

Pair Corralation between Erste Group and Turism Felix

Assuming the 90 days trading horizon Erste Group is expected to generate 2.43 times less return on investment than Turism Felix. But when comparing it to its historical volatility, Erste Group Bank is 1.59 times less risky than Turism Felix. It trades about 0.12 of its potential returns per unit of risk. Turism Felix B is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Turism Felix B on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Turism Felix B or generate 36.67% return on investment over 90 days.

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

Erste Group Bank  vs.  Turism Felix B

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 weak basic indicators, Erste Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Turism Felix B

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Turism Felix B are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Turism Felix displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erste Group and Turism Felix

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

The idea behind Erste Group Bank and Turism Felix B 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.