Correlation Between OTP Bank and Budapesti Ingatlan

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

Diversification Opportunities for OTP Bank and Budapesti Ingatlan

0.09

Correlation Coefficient

OTP Bank  Budapesti Ingatlan

Significant diversification

The 3 months correlation between OTP and Budapesti is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Budapesti Ingatlan Hasznositas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Budapesti Ingatlan 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 Budapesti Ingatlan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Budapesti Ingatlan has no effect on the direction of OTP Bank i.e., OTP Bank and Budapesti Ingatlan go up and down completely randomly.

Pair Corralation between OTP Bank and Budapesti Ingatlan

Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 0.9 times more return on investment than Budapesti Ingatlan. However, OTP Bank Nyrt is 1.12 times less risky than Budapesti Ingatlan. It trades about 0.17 of its potential returns per unit of risk. Budapesti Ingatlan Hasznositasi is currently generating about 0.03 per unit of risk. If you would invest  2,169,000  in OTP Bank Nyrt on December 30, 2024 and sell it today you would earn a total of  428,000  from holding OTP Bank Nyrt or generate 19.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

OTP Bank Nyrt  vs.  Budapesti Ingatlan Hasznositas

OTP Bank Nyrt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, OTP Bank exhibited solid returns over the last few months and may actually be approaching a breakup point.

Budapesti Ingatlan

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Budapesti Ingatlan Hasznositasi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Budapesti Ingatlan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with OTP Bank and Budapesti Ingatlan

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

The idea behind OTP Bank Nyrt and Budapesti Ingatlan Hasznositasi 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.