Correlation Between OTP Bank and Coca Cola

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

Diversification Opportunities for OTP Bank and Coca Cola

0.0

Correlation Coefficient

OTP Bank  Coca Cola

Pay attention - limited upside

The 3 months correlation between OTP and Coca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Coca Cola Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of OTP Bank i.e., OTP Bank and Coca Cola go up and down completely randomly.

Pair Corralation between OTP Bank and Coca Cola

Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 10.75 times more return on investment than Coca Cola. However, OTP Bank is 10.75 times more volatile than Coca Cola Co. It trades about 0.05 of its potential returns per unit of risk. Coca Cola Co is currently generating about 0.0 per unit of risk. If you would invest  1,259,000  in OTP Bank Nyrt on December 5, 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	Flat
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

OTP Bank Nyrt  vs.  Coca Cola Co

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.

Coca Cola

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Coca Cola unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OTP Bank and Coca Cola

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

The idea behind OTP Bank Nyrt and Coca Cola Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.