Correlation Between Erste Group and SERI INDUSTRIAL

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

Diversification Opportunities for Erste Group and SERI INDUSTRIAL

0.23

Correlation Coefficient

Erste Group  SERI INDUSTRIAL

Modest diversification

The 3 months correlation between Erste and SERI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO 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 SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of Erste Group i.e., Erste Group and SERI INDUSTRIAL go up and down completely randomly.

Pair Corralation between Erste Group and SERI INDUSTRIAL

Assuming the 90 days trading horizon Erste Group Bank is expected to generate 0.46 times more return on investment than SERI INDUSTRIAL. However, Erste Group Bank is 2.19 times less risky than SERI INDUSTRIAL. It trades about 0.22 of its potential returns per unit of risk. SERI INDUSTRIAL EO is currently generating about 0.05 per unit of risk. If you would invest  6,026  in Erste Group Bank on April 25, 2025 and sell it today you would earn a total of  1,769  from holding Erste Group Bank or generate 29.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Erste Group Bank  vs.  SERI INDUSTRIAL EO

Erste Group Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Erste Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

SERI INDUSTRIAL EO

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SERI INDUSTRIAL EO are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, SERI INDUSTRIAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Erste Group and SERI INDUSTRIAL

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

The idea behind Erste Group Bank and SERI INDUSTRIAL EO 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.