Correlation Between OTP Bank and AKKO Invest

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

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

Diversification Opportunities for OTP Bank and AKKO Invest

0.79

Correlation Coefficient

OTP Bank  AKKO Invest

Poor diversification

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

Pair Corralation between OTP Bank and AKKO Invest

Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 0.57 times more return on investment than AKKO Invest. However, OTP Bank Nyrt is 1.75 times less risky than AKKO Invest. It trades about 0.12 of its potential returns per unit of risk. AKKO Invest Nyrt is currently generating about 0.03 per unit of risk. If you would invest  971,462  in OTP Bank Nyrt on September 14, 2024 and sell it today you would earn a total of  1,223,538  from holding OTP Bank Nyrt or generate 125.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

OTP Bank Nyrt  vs.  AKKO Invest Nyrt

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.

AKKO Invest Nyrt

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AKKO Invest Nyrt are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AKKO Invest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OTP Bank and AKKO Invest

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

The idea behind OTP Bank Nyrt and AKKO Invest 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.