Correlation Between Budapesti Ingatlan and NordTelekom Telecommunicatio

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

By analyzing existing cross correlation between Budapesti Ingatlan Hasznositasi and NordTelekom Telecommunications Service, you can compare the effects of market volatilities on Budapesti Ingatlan and NordTelekom Telecommunicatio 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 Budapesti Ingatlan with a short position of NordTelekom Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Budapesti Ingatlan and NordTelekom Telecommunicatio.

Diversification Opportunities for Budapesti Ingatlan and NordTelekom Telecommunicatio

-0.27

Correlation Coefficient

Budapesti Ingatlan  NordTelekom Telecommunicatio

Very good diversification

The 3 months correlation between Budapesti and NordTelekom is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Budapesti Ingatlan Hasznositas and NordTelekom Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NordTelekom Telecommunicatio and Budapesti Ingatlan 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 Budapesti Ingatlan Hasznositasi are associated (or correlated) with NordTelekom Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NordTelekom Telecommunicatio has no effect on the direction of Budapesti Ingatlan i.e., Budapesti Ingatlan and NordTelekom Telecommunicatio go up and down completely randomly.

Pair Corralation between Budapesti Ingatlan and NordTelekom Telecommunicatio

Assuming the 90 days trading horizon Budapesti Ingatlan Hasznositasi is expected to generate 0.42 times more return on investment than NordTelekom Telecommunicatio. However, Budapesti Ingatlan Hasznositasi is 2.39 times less risky than NordTelekom Telecommunicatio. It trades about 0.07 of its potential returns per unit of risk. NordTelekom Telecommunications Service is currently generating about -0.02 per unit of risk. If you would invest  47,000  in Budapesti Ingatlan Hasznositasi on September 16, 2024 and sell it today you would earn a total of  3,200  from holding Budapesti Ingatlan Hasznositasi or generate 6.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

Budapesti Ingatlan Hasznositas  vs.  NordTelekom Telecommunications

Budapesti Ingatlan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Budapesti Ingatlan Hasznositasi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Budapesti Ingatlan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NordTelekom Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NordTelekom Telecommunications Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Budapesti Ingatlan and NordTelekom Telecommunicatio

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

The idea behind Budapesti Ingatlan Hasznositasi and NordTelekom Telecommunications Service 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.