Correlation Between OTP Bank and Edita Food
Can any of the company-specific risk be diversified away by investing in both OTP Bank and Edita Food 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 Edita Food 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 Edita Food Industries, you can compare the effects of market volatilities on OTP Bank and Edita Food 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 Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and Edita Food.
Diversification Opportunities for OTP Bank and Edita Food
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between OTP and Edita is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries 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 Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of OTP Bank i.e., OTP Bank and Edita Food go up and down completely randomly.
Pair Corralation between OTP Bank and Edita Food
Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 4.15 times more return on investment than Edita Food. However, OTP Bank is 4.15 times more volatile than Edita Food Industries. It trades about 0.1 of its potential returns per unit of risk. Edita Food Industries is currently generating about -0.19 per unit of risk. If you would invest 1,259,000 in OTP Bank Nyrt on August 30, 2024 and sell it today you would earn a total of 0.00 from holding OTP Bank Nyrt or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
OTP Bank Nyrt vs. Edita Food Industries
Performance |
| Timeline |
| OTP Bank Nyrt |
| Edita Food Industries |
OTP Bank and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and Edita Food
The main advantage of trading using opposite OTP Bank and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| OTP Bank vs. Tungsten West PLC | OTP Bank vs. Argo Group Limited | OTP Bank vs. Hardide PLC | OTP Bank vs. Versarien PLC |
| Edita Food vs. Chocoladefabriken Lindt Spruengli | Edita Food vs. National Atomic Co | Edita Food vs. OTP Bank Nyrt | Edita Food vs. Samsung Electronics Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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