Correlation Between OTP Bank and Waste Management

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

Diversification Opportunities for OTP Bank and Waste Management

0.12

Correlation Coefficient

OTP Bank  Waste Management

Average diversification

The 3 months correlation between OTP and Waste is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of OTP Bank i.e., OTP Bank and Waste Management go up and down completely randomly.

Pair Corralation between OTP Bank and Waste Management

If you would invest  20,335  in Waste Management on October 23, 2024 and sell it today you would earn a total of  890.00  from holding Waste Management or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

OTP Bank Nyrt  vs.  Waste Management

OTP Bank Nyrt

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OTP Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Waste Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Waste Management is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with OTP Bank and Waste Management

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

The idea behind OTP Bank Nyrt and Waste Management 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.