Correlation Between Delta Technologies and OTP Bank

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

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

Diversification Opportunities for Delta Technologies and OTP Bank

0.16

Correlation Coefficient

Delta Technologies  OTP Bank

Average diversification

The 3 months correlation between Delta and OTP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Delta Technologies 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 Delta Technologies 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 Delta Technologies 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 Delta Technologies i.e., Delta Technologies and OTP Bank go up and down completely randomly.

Pair Corralation between Delta Technologies and OTP Bank

Assuming the 90 days trading horizon Delta Technologies Nyrt is expected to under-perform the OTP Bank. In addition to that, Delta Technologies is 1.48 times more volatile than OTP Bank Nyrt. It trades about -0.01 of its total potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.17 per unit of volatility. If you would invest  2,169,000  in OTP Bank Nyrt on December 30, 2024 and sell it today you would earn a total of  428,000  from holding OTP Bank Nyrt or generate 19.73% return on investment over 90 days.

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

Delta Technologies Nyrt  vs.  OTP Bank Nyrt

Delta Technologies Nyrt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Technologies Nyrt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Delta Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, OTP Bank exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Technologies and OTP Bank

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

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.