Emerging Eastern European stock markets offer high returns and risk diversification.
The article explores how stock markets in Eastern Europe are connected and how investors can manage risks. The researchers studied markets in Russia, Poland, Hungary, Czech Republic, Bulgaria, and Slovenia. They found that these markets are somewhat separate from the global economy, which can affect returns and risks. The study shows that understanding the overall risk in emerging markets can help predict how stocks will perform. It also reveals how stock markets, asset prices, and exchange rates are linked through volatility and pricing.