Correlation Between Polar Capital and OTP Bank

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

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

Diversification Opportunities for Polar Capital and OTP Bank

-0.05

Correlation Coefficient

Polar Capital  OTP Bank

Good diversification

The 3 months correlation between Polar and OTP is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and OTP Bank Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OTP Bank Nyrt and Polar Capital 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 Polar Capital Technology are associated (or correlated) with OTP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OTP Bank Nyrt has no effect on the direction of Polar Capital i.e., Polar Capital and OTP Bank go up and down completely randomly.

Pair Corralation between Polar Capital and OTP Bank

If you would invest  34,900  in Polar Capital Technology on October 24, 2024 and sell it today you would earn a total of  2,450  from holding Polar Capital Technology or generate 7.02% return on investment over 90 days.

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

Polar Capital Technology  vs.  OTP Bank Nyrt

Polar Capital Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Technology are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Polar Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

OTP Bank Nyrt

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, OTP Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polar Capital and OTP Bank

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

The idea behind Polar Capital Technology and OTP Bank 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.