Correlation Between OTP Bank and 70GD

Can any of the company-specific risk be diversified away by investing in both OTP Bank and 70GD 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 70GD 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 70GD, you can compare the effects of market volatilities on OTP Bank and 70GD 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 70GD. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and 70GD.

Diversification Opportunities for OTP Bank and 70GD

-0.11

Correlation Coefficient

OTP Bank  70GD

Good diversification

The 3 months correlation between OTP and 70GD is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and 70GD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 70GD 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 70GD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 70GD has no effect on the direction of OTP Bank i.e., OTP Bank and 70GD go up and down completely randomly.

Pair Corralation between OTP Bank and 70GD

Assuming the 90 days trading horizon OTP Bank is expected to generate 10.45 times less return on investment than 70GD. But when comparing it to its historical volatility, OTP Bank Nyrt is 7.52 times less risky than 70GD. It trades about 0.03 of its potential returns per unit of risk. 70GD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  82.00  in 70GD on September 23, 2024 and sell it today you would lose (11.00) from holding 70GD or give up 13.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.72%
Values	Daily Returns

OTP Bank Nyrt  vs.  70GD

OTP Bank Nyrt

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OTP Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

70GD

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 70GD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, 70GD is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with OTP Bank and 70GD

The main advantage of trading using opposite OTP Bank and 70GD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, 70GD 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 70GD will offset losses from the drop in 70GD's long position.

The idea behind OTP Bank Nyrt and 70GD 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.