Correlation Between OTP Bank and Faron Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both OTP Bank and Faron Pharmaceuticals 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 Faron Pharmaceuticals 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 Faron Pharmaceuticals Oy, you can compare the effects of market volatilities on OTP Bank and Faron Pharmaceuticals 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 Faron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and Faron Pharmaceuticals.
Diversification Opportunities for OTP Bank and Faron Pharmaceuticals
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between OTP and Faron is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Faron Pharmaceuticals Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faron Pharmaceuticals 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 Faron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faron Pharmaceuticals has no effect on the direction of OTP Bank i.e., OTP Bank and Faron Pharmaceuticals go up and down completely randomly.
Pair Corralation between OTP Bank and Faron Pharmaceuticals
Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 1.18 times more return on investment than Faron Pharmaceuticals. However, OTP Bank is 1.18 times more volatile than Faron Pharmaceuticals Oy. It trades about 0.03 of its potential returns per unit of risk. Faron Pharmaceuticals Oy is currently generating about 0.0 per unit of risk. If you would invest 1,176,324 in OTP Bank Nyrt on September 24, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OTP Bank Nyrt vs. Faron Pharmaceuticals Oy
Performance |
| Timeline |
| OTP Bank Nyrt |
| Faron Pharmaceuticals |
OTP Bank and Faron Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and Faron Pharmaceuticals
The main advantage of trading using opposite OTP Bank and Faron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, Faron Pharmaceuticals 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 Faron Pharmaceuticals will offset losses from the drop in Faron Pharmaceuticals' long position.| OTP Bank vs. Uniper SE | OTP Bank vs. Mulberry Group PLC | OTP Bank vs. London Security Plc | OTP Bank vs. Triad Group PLC |
| Faron Pharmaceuticals vs. Toyota Motor Corp | Faron Pharmaceuticals vs. SoftBank Group Corp | Faron Pharmaceuticals vs. OTP Bank Nyrt | Faron Pharmaceuticals vs. Public Service Enterprise |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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