Correlation Between OPUS GLOBAL and Magyar Telekom

Can any of the company-specific risk be diversified away by investing in both OPUS GLOBAL and Magyar Telekom 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 OPUS GLOBAL and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for OPUS GLOBAL and Magyar Telekom

0.79

Correlation Coefficient

OPUS GLOBAL  Magyar Telekom

Poor diversification

The 3 months correlation between OPUS and Magyar is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding OPUS GLOBAL Nyrt and Magyar Telekom PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Telekom PLC and OPUS GLOBAL 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 OPUS GLOBAL Nyrt are associated (or correlated) with Magyar Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Telekom PLC has no effect on the direction of OPUS GLOBAL i.e., OPUS GLOBAL and Magyar Telekom go up and down completely randomly.

Pair Corralation between OPUS GLOBAL and Magyar Telekom

Assuming the 90 days trading horizon OPUS GLOBAL is expected to generate 1.48 times less return on investment than Magyar Telekom. But when comparing it to its historical volatility, OPUS GLOBAL Nyrt is 1.31 times less risky than Magyar Telekom. It trades about 0.22 of its potential returns per unit of risk. Magyar Telekom PLC is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  128,400  in Magyar Telekom PLC on December 4, 2024 and sell it today you would earn a total of  40,600  from holding Magyar Telekom PLC or generate 31.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

OPUS GLOBAL Nyrt  vs.  Magyar Telekom PLC

OPUS GLOBAL Nyrt

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OPUS GLOBAL Nyrt are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, OPUS GLOBAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Magyar Telekom PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Telekom PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Magyar Telekom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OPUS GLOBAL and Magyar Telekom

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

The idea behind OPUS GLOBAL Nyrt and Magyar Telekom 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.