Correlation Between Alien Metals and OTP Bank

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

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

Diversification Opportunities for Alien Metals and OTP Bank

0.05

Correlation Coefficient

Alien Metals  OTP Bank

Significant diversification

The 3 months correlation between Alien and OTP is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alien Metals 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 Alien Metals 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 Alien Metals 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 Alien Metals i.e., Alien Metals and OTP Bank go up and down completely randomly.

Pair Corralation between Alien Metals and OTP Bank

Assuming the 90 days trading horizon Alien Metals is expected to under-perform the OTP Bank. But the stock apears to be less risky and, when comparing its historical volatility, Alien Metals is 1.14 times less risky than OTP Bank. The stock trades about -0.04 of its potential returns per unit of risk. The OTP Bank Nyrt is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,176,324  in OTP Bank Nyrt on October 22, 2024 and sell it today you would earn a total of  82,676  from holding OTP Bank Nyrt or generate 7.03% return on investment over 90 days.

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

Alien Metals  vs.  OTP Bank Nyrt

Alien Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alien Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 Alien Metals and OTP Bank

The main advantage of trading using opposite Alien Metals and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alien Metals 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 Alien Metals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.