Correlation Between MOL Nyrt and Nutex Investments

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

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

Diversification Opportunities for MOL Nyrt and Nutex Investments

0.31

Correlation Coefficient

MOL Nyrt  Nutex Investments

Weak diversification

The 3 months correlation between MOL and Nutex is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MOL Nyrt and Nutex Investments PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutex Investments PLC and MOL 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 MOL Nyrt are associated (or correlated) with Nutex Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutex Investments PLC has no effect on the direction of MOL Nyrt i.e., MOL Nyrt and Nutex Investments go up and down completely randomly.

Pair Corralation between MOL Nyrt and Nutex Investments

Assuming the 90 days trading horizon MOL Nyrt is expected to generate 10.71 times less return on investment than Nutex Investments. But when comparing it to its historical volatility, MOL Nyrt is 5.71 times less risky than Nutex Investments. It trades about 0.05 of its potential returns per unit of risk. Nutex Investments PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,945  in Nutex Investments PLC on September 15, 2024 and sell it today you would earn a total of  515.00  from holding Nutex Investments PLC or generate 26.48% return on investment over 90 days.

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

MOL Nyrt  vs.  Nutex Investments PLC

MOL Nyrt

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MOL Nyrt are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, MOL Nyrt is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nutex Investments PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutex Investments PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nutex Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOL Nyrt and Nutex Investments

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

The idea behind MOL Nyrt and Nutex Investments PLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.