Correlation Between OTP Bank and AP Moeller

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

Diversification Opportunities for OTP Bank and AP Moeller

-0.09

Correlation Coefficient

OTP Bank  AP Moeller

Good diversification

The 3 months correlation between OTP and 0O76 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and AP Moeller Maersk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Moeller Maersk 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 AP Moeller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Moeller Maersk has no effect on the direction of OTP Bank i.e., OTP Bank and AP Moeller go up and down completely randomly.

Pair Corralation between OTP Bank and AP Moeller

Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 2.52 times more return on investment than AP Moeller. However, OTP Bank is 2.52 times more volatile than AP Moeller Maersk AS. It trades about 0.03 of its potential returns per unit of risk. AP Moeller Maersk AS is currently generating about 0.01 per unit of risk. If you would invest  1,176,324  in OTP Bank Nyrt on October 5, 2024 and sell it today you would earn a total of  82,676  from holding OTP Bank Nyrt or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

OTP Bank Nyrt  vs.  AP Moeller Maersk AS

OTP Bank Nyrt

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 5 (%) 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.

AP Moeller Maersk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AP Moeller Maersk AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AP Moeller unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OTP Bank and AP Moeller

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

The idea behind OTP Bank Nyrt and AP Moeller Maersk AS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.