Correlation Between OTP Bank and Appeninn Nyrt

Can any of the company-specific risk be diversified away by investing in both OTP Bank and Appeninn 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 OTP Bank and Appeninn Nyrt 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 Appeninn Nyrt, you can compare the effects of market volatilities on OTP Bank and Appeninn 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 OTP Bank with a short position of Appeninn Nyrt. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and Appeninn Nyrt.

Diversification Opportunities for OTP Bank and Appeninn Nyrt

0.61

Correlation Coefficient

OTP Bank  Appeninn Nyrt

Poor diversification

The 3 months correlation between OTP and Appeninn is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Appeninn Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appeninn 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 Appeninn Nyrt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appeninn Nyrt has no effect on the direction of OTP Bank i.e., OTP Bank and Appeninn Nyrt go up and down completely randomly.

Pair Corralation between OTP Bank and Appeninn Nyrt

Assuming the 90 days trading horizon OTP Bank Nyrt is expected to under-perform the Appeninn Nyrt. In addition to that, OTP Bank is 1.09 times more volatile than Appeninn Nyrt. It trades about -0.04 of its total potential returns per unit of risk. Appeninn Nyrt is currently generating about 0.41 per unit of volatility. If you would invest  74,200  in Appeninn Nyrt on December 5, 2024 and sell it today you would earn a total of  12,200  from holding Appeninn Nyrt or generate 16.44% return on investment over 90 days.

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

OTP Bank Nyrt  vs.  Appeninn Nyrt

OTP Bank Nyrt

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, OTP Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Appeninn Nyrt

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Appeninn Nyrt are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Appeninn Nyrt sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OTP Bank and Appeninn Nyrt

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

The idea behind OTP Bank Nyrt and Appeninn 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.