Correlation Between OTP Bank and Optima Health

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

Diversification Opportunities for OTP Bank and Optima Health

0.0

Correlation Coefficient

OTP Bank  Optima Health

Pay attention - limited upside

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

Pair Corralation between OTP Bank and Optima Health

If you would invest  14,200  in Optima Health plc on December 30, 2024 and sell it today you would earn a total of  2,900  from holding Optima Health plc or generate 20.42% return on investment over 90 days.

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

OTP Bank Nyrt  vs.  Optima Health plc

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.

Optima Health plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optima Health plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Optima Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OTP Bank and Optima Health

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

The idea behind OTP Bank Nyrt and Optima Health plc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.