Correlation Between Germina Agribusiness and Erste Group

Can any of the company-specific risk be diversified away by investing in both Germina Agribusiness and Erste Group 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 Germina Agribusiness and Erste Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Germina Agribusiness SA and Erste Group Bank, you can compare the effects of market volatilities on Germina Agribusiness and Erste Group 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 Germina Agribusiness with a short position of Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Germina Agribusiness and Erste Group.

Diversification Opportunities for Germina Agribusiness and Erste Group

0.0

Correlation Coefficient

Germina Agribusiness  Erste Group

Pay attention - limited upside

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

Pair Corralation between Germina Agribusiness and Erste Group

If you would invest  16,546  in Erste Group Bank on October 22, 2024 and sell it today you would earn a total of  14,094  from holding Erste Group Bank or generate 85.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Germina Agribusiness SA  vs.  Erste Group Bank

Germina Agribusiness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Germina Agribusiness SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Germina Agribusiness is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Germina Agribusiness and Erste Group

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

The idea behind Germina Agribusiness SA and Erste Group Bank 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.