Correlation Between State Bank and MOL Hungarian

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

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

Diversification Opportunities for State Bank and MOL Hungarian

0.0

Correlation Coefficient

State Bank  MOL Hungarian

Pay attention - limited upside

The 3 months correlation between State and MOL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and MOL Hungarian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL Hungarian Oil and State 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 State Bank of are associated (or correlated) with MOL Hungarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL Hungarian Oil has no effect on the direction of State Bank i.e., State Bank and MOL Hungarian go up and down completely randomly.

Pair Corralation between State Bank and MOL Hungarian

If you would invest  292,200  in MOL Hungarian Oil on December 30, 2024 and sell it today you would earn a total of  0.00  from holding MOL Hungarian Oil or generate 0.0% return on investment over 90 days.

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

State Bank of  vs.  MOL Hungarian Oil

State Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MOL Hungarian Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days MOL Hungarian Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MOL Hungarian is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with State Bank and MOL Hungarian

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

The idea behind State Bank of and MOL Hungarian Oil 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.