Correlation Between Budapesti Ingatlan and OTP Bank

Can any of the company-specific risk be diversified away by investing in both Budapesti Ingatlan 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 Budapesti Ingatlan and OTP Bank 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 OTP Bank Nyrt, you can compare the effects of market volatilities on Budapesti Ingatlan 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 Budapesti Ingatlan with a short position of OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Budapesti Ingatlan and OTP Bank.

Diversification Opportunities for Budapesti Ingatlan and OTP Bank

0.59

Correlation Coefficient

Budapesti Ingatlan  OTP Bank

Very weak diversification

The 3 months correlation between Budapesti and OTP is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Budapesti Ingatlan Hasznositas 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 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 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 Budapesti Ingatlan i.e., Budapesti Ingatlan and OTP Bank go up and down completely randomly.

Pair Corralation between Budapesti Ingatlan and OTP Bank

Assuming the 90 days trading horizon Budapesti Ingatlan is expected to generate 1.71 times less return on investment than OTP Bank. In addition to that, Budapesti Ingatlan is 1.43 times more volatile than OTP Bank Nyrt. It trades about 0.1 of its total potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.23 per unit of volatility. If you would invest  1,850,000  in OTP Bank Nyrt on September 14, 2024 and sell it today you would earn a total of  345,000  from holding OTP Bank Nyrt or generate 18.65% return on investment over 90 days.

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

Budapesti Ingatlan Hasznositas  vs.  OTP Bank Nyrt

Budapesti Ingatlan

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Budapesti Ingatlan Hasznositasi are ranked lower than 7 (%) 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.

OTP Bank Nyrt

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 18 (%) 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 Budapesti Ingatlan and OTP Bank

The main advantage of trading using opposite Budapesti Ingatlan and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Budapesti Ingatlan 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 Budapesti Ingatlan Hasznositasi 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.