Correlation Between 4iG Nyrt and OTP Bank

Can any of the company-specific risk be diversified away by investing in both 4iG Nyrt 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 4iG Nyrt and OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4iG Nyrt and OTP Bank Nyrt, you can compare the effects of market volatilities on 4iG Nyrt 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 4iG Nyrt with a short position of OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4iG Nyrt and OTP Bank.

Diversification Opportunities for 4iG Nyrt and OTP Bank

0.81

Correlation Coefficient

4iG Nyrt  OTP Bank

Very poor diversification

The 3 months correlation between 4iG and OTP is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding 4iG Nyrt 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 4iG Nyrt 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 4iG Nyrt 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 4iG Nyrt i.e., 4iG Nyrt and OTP Bank go up and down completely randomly.

Pair Corralation between 4iG Nyrt and OTP Bank

Assuming the 90 days trading horizon 4iG Nyrt is expected to generate 2.3 times more return on investment than OTP Bank. However, 4iG Nyrt is 2.3 times more volatile than OTP Bank Nyrt. It trades about 0.28 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.2 per unit of risk. If you would invest  92,400  in 4iG Nyrt on December 28, 2024 and sell it today you would earn a total of  83,600  from holding 4iG Nyrt or generate 90.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

4iG Nyrt  vs.  OTP Bank Nyrt

4iG Nyrt

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 4iG Nyrt are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, 4iG Nyrt exhibited solid returns over the last few months and may actually be approaching a breakup point.

OTP Bank Nyrt

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, OTP Bank exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 4iG Nyrt and OTP Bank

The main advantage of trading using opposite 4iG Nyrt and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4iG Nyrt 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 4iG Nyrt 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..