Correlation Between Erste Group and Oesterr Post

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

Diversification Opportunities for Erste Group and Oesterr Post

0.61

Correlation Coefficient

Erste Group  Oesterr Post

Poor diversification

The 3 months correlation between Erste and Oesterr is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Oesterr Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oesterr Post AG 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 Oesterr Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oesterr Post AG has no effect on the direction of Erste Group i.e., Erste Group and Oesterr Post go up and down completely randomly.

Pair Corralation between Erste Group and Oesterr Post

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 1.63 times more return on investment than Oesterr Post. However, Erste Group is 1.63 times more volatile than Oesterr Post AG. It trades about 0.06 of its potential returns per unit of risk. Oesterr Post AG is currently generating about -0.02 per unit of risk. If you would invest  3,560  in Erste Group Bank on January 11, 2025 and sell it today you would earn a total of  2,245  from holding Erste Group Bank or generate 63.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.81%
Values	Daily Returns

Erste Group Bank  vs.  Oesterr Post AG

Erste Group Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Erste Group Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Erste Group is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Oesterr Post AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oesterr Post AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Oesterr Post is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Erste Group and Oesterr Post

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

The idea behind Erste Group Bank and Oesterr Post AG 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.