Correlation Between OTP Bank and Americas Gold

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

Diversification Opportunities for OTP Bank and Americas Gold

0.86

Correlation Coefficient

OTP Bank  Americas Gold

Very poor diversification

The 3 months correlation between OTP and Americas is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Americas Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americas Gold 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 Americas Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americas Gold has no effect on the direction of OTP Bank i.e., OTP Bank and Americas Gold go up and down completely randomly.

Pair Corralation between OTP Bank and Americas Gold

Assuming the 90 days horizon OTP Bank is expected to generate 2.2 times less return on investment than Americas Gold. But when comparing it to its historical volatility, OTP Bank Nyrt is 2.88 times less risky than Americas Gold. It trades about 0.18 of its potential returns per unit of risk. Americas Gold and is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Americas Gold and on December 21, 2024 and sell it today you would earn a total of  16.00  from holding Americas Gold and or generate 42.11% return on investment over 90 days.

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

OTP Bank Nyrt  vs.  Americas Gold and

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 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, OTP Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Americas Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Americas Gold and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Americas Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OTP Bank and Americas Gold

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

The idea behind OTP Bank Nyrt and Americas Gold and 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.