Correlation Between Gaztransport and OTP Bank

Can any of the company-specific risk be diversified away by investing in both Gaztransport and OTP Bank 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 Gaztransport and OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gaztransport et Technigaz and OTP Bank Nyrt, you can compare the effects of market volatilities on Gaztransport and OTP Bank 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 Gaztransport with a short position of OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and OTP Bank.

Diversification Opportunities for Gaztransport and OTP Bank

0.0

Correlation Coefficient

Gaztransport  OTP Bank

Pay attention - limited upside

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

Pair Corralation between Gaztransport and OTP Bank

Assuming the 90 days trading horizon Gaztransport is expected to generate 6.35 times less return on investment than OTP Bank. But when comparing it to its historical volatility, Gaztransport et Technigaz is 11.83 times less risky than OTP Bank. It trades about 0.14 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,259,000  in OTP Bank Nyrt on October 6, 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	100.0%
Values	Daily Returns

Gaztransport et Technigaz  vs.  OTP Bank Nyrt

Gaztransport et Technigaz

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport et Technigaz are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gaztransport may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Gaztransport and OTP Bank

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

The idea behind Gaztransport et Technigaz and OTP Bank Nyrt 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.