Correlation Between Teraplast Bist and Erste Group

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

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

Diversification Opportunities for Teraplast Bist and Erste Group

0.0

Correlation Coefficient

Teraplast Bist  Erste Group

Pay attention - limited upside

The 3 months correlation between Teraplast and Erste is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Teraplast Bist 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 Teraplast Bist 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 Teraplast Bist 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 Teraplast Bist i.e., Teraplast Bist and Erste Group go up and down completely randomly.

Pair Corralation between Teraplast Bist and Erste Group

If you would invest  29,450  in Erste Group Bank on December 22, 2024 and sell it today you would earn a total of  4,040  from holding Erste Group Bank or generate 13.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.79%
Values	Daily Returns

Teraplast Bist  vs.  Erste Group Bank

Teraplast Bist

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teraplast Bist has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Teraplast Bist 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

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

Pair Trading with Teraplast Bist and Erste Group

The main advantage of trading using opposite Teraplast Bist and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teraplast Bist 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 Teraplast Bist 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.