Correlation Between Guaranty Trust and MOL Hungarian

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

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

Diversification Opportunities for Guaranty Trust and MOL Hungarian

-0.01

Correlation Coefficient

Guaranty Trust  MOL Hungarian

Good diversification

The 3 months correlation between Guaranty and MOL is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding 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 Guaranty Trust 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 Guaranty Trust Holding 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 Guaranty Trust i.e., Guaranty Trust and MOL Hungarian go up and down completely randomly.

Pair Corralation between Guaranty Trust and MOL Hungarian

Assuming the 90 days trading horizon Guaranty Trust Holding is expected to generate 0.76 times more return on investment than MOL Hungarian. However, Guaranty Trust Holding is 1.32 times less risky than MOL Hungarian. It trades about 0.03 of its potential returns per unit of risk. MOL Hungarian Oil is currently generating about 0.01 per unit of risk. If you would invest  175.00  in Guaranty Trust Holding on September 25, 2024 and sell it today you would earn a total of  4.00  from holding Guaranty Trust Holding or generate 2.29% return on investment over 90 days.

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

Guaranty Trust Holding  vs.  MOL Hungarian Oil

Guaranty Trust Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Guaranty Trust 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

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOL Hungarian Oil are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Guaranty Trust and MOL Hungarian

The main advantage of trading using opposite Guaranty Trust and MOL Hungarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guaranty Trust 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 Guaranty Trust Holding 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.