Correlation Between OTP Bank and International Consolidated

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

Diversification Opportunities for OTP Bank and International Consolidated

-0.11

Correlation Coefficient

OTP Bank  International Consolidated

Good diversification

The 3 months correlation between OTP and International is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of OTP Bank i.e., OTP Bank and International Consolidated go up and down completely randomly.

Pair Corralation between OTP Bank and International Consolidated

Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 4.59 times more return on investment than International Consolidated. However, OTP Bank is 4.59 times more volatile than International Consolidated Airlines. It trades about 0.04 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.15 per unit of risk. If you would invest  1,205,054  in OTP Bank Nyrt on October 5, 2024 and sell it today you would earn a total of  53,946  from holding OTP Bank Nyrt or generate 4.48% 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.  International Consolidated Air

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.

International Consolidated

Risk-Adjusted Performance

38 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OTP Bank and International Consolidated

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

The idea behind OTP Bank Nyrt and International Consolidated Airlines 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.