Correlation Between OTP Bank and Intermediate Capital

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

Diversification Opportunities for OTP Bank and Intermediate Capital

0.06

Correlation Coefficient

OTP Bank  Intermediate Capital

Significant diversification

The 3 months correlation between OTP and Intermediate is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of OTP Bank i.e., OTP Bank and Intermediate Capital go up and down completely randomly.

Pair Corralation between OTP Bank and Intermediate Capital

Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 7.14 times more return on investment than Intermediate Capital. However, OTP Bank is 7.14 times more volatile than Intermediate Capital Group. It trades about 0.06 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.02 per unit of risk. If you would invest  1,259,000  in OTP Bank Nyrt on October 24, 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

OTP Bank Nyrt  vs.  Intermediate Capital Group

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 unsteady basic indicators, OTP Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Intermediate Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with OTP Bank and Intermediate Capital

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

The idea behind OTP Bank Nyrt and Intermediate Capital Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.