Correlation Between SWISS WATER and OTP Bank

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

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

Diversification Opportunities for SWISS WATER and OTP Bank

-0.85

Correlation Coefficient

SWISS WATER  OTP Bank

Pay attention - limited upside

The 3 months correlation between SWISS and OTP is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 SWISS WATER i.e., SWISS WATER and OTP Bank go up and down completely randomly.

Pair Corralation between SWISS WATER and OTP Bank

Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to under-perform the OTP Bank. In addition to that, SWISS WATER is 1.69 times more volatile than OTP Bank Nyrt. It trades about -0.08 of its total potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.19 per unit of volatility. If you would invest  5,218  in OTP Bank Nyrt on December 19, 2024 and sell it today you would earn a total of  1,138  from holding OTP Bank Nyrt or generate 21.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SWISS WATER DECAFFCOFFEE  vs.  OTP Bank Nyrt

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWISS WATER DECAFFCOFFEE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

OTP Bank Nyrt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, OTP Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SWISS WATER and OTP Bank

The main advantage of trading using opposite SWISS WATER and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.