Correlation Between OTP Bank and Cars

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

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

Diversification Opportunities for OTP Bank and Cars

-0.34

Correlation Coefficient

OTP Bank  Cars

Very good diversification

The 3 months correlation between OTP and Cars is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and OTP Bank 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 OTP Bank Nyrt are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of OTP Bank i.e., OTP Bank and Cars go up and down completely randomly.

Pair Corralation between OTP Bank and Cars

If you would invest  1,259,000  in OTP Bank Nyrt on December 22, 2024 and sell it today you would earn a total of  0.00  from holding OTP Bank Nyrt or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.45%
Values	Daily Returns

OTP Bank Nyrt  vs.  Cars Inc

OTP Bank Nyrt

Risk-Adjusted Performance

Very Weak

Over the last 90 days OTP Bank Nyrt has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OTP Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cars Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cars Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with OTP Bank and Cars

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

The idea behind OTP Bank Nyrt and Cars Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.