Correlation Between NordTelekom Telecommunicatio and MOL Nyrt

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

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

Diversification Opportunities for NordTelekom Telecommunicatio and MOL Nyrt

-0.18

Correlation Coefficient

NordTelekom Telecommunicatio  MOL Nyrt

Good diversification

The 3 months correlation between NordTelekom and MOL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding NordTelekom Telecommunications and MOL Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL Nyrt and NordTelekom Telecommunicatio 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 NordTelekom Telecommunications Service are associated (or correlated) with MOL Nyrt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL Nyrt has no effect on the direction of NordTelekom Telecommunicatio i.e., NordTelekom Telecommunicatio and MOL Nyrt go up and down completely randomly.

Pair Corralation between NordTelekom Telecommunicatio and MOL Nyrt

Assuming the 90 days trading horizon NordTelekom Telecommunicatio is expected to generate 1.42 times less return on investment than MOL Nyrt. In addition to that, NordTelekom Telecommunicatio is 4.49 times more volatile than MOL Nyrt. It trades about 0.01 of its total potential returns per unit of risk. MOL Nyrt is currently generating about 0.07 per unit of volatility. If you would invest  263,600  in MOL Nyrt on September 14, 2024 and sell it today you would earn a total of  9,400  from holding MOL Nyrt or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.32%
Values	Daily Returns

NordTelekom Telecommunications  vs.  MOL Nyrt

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 comparatively stable basic indicators, NordTelekom Telecommunicatio is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

MOL Nyrt

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MOL Nyrt are ranked lower than 5 (%) 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.

Pair Trading with NordTelekom Telecommunicatio and MOL Nyrt

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

The idea behind NordTelekom Telecommunications Service and MOL 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.