Correlation Between Aurora Investment and OTP Bank
Can any of the company-specific risk be diversified away by investing in both Aurora Investment 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 Aurora Investment and OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Investment Trust and OTP Bank Nyrt, you can compare the effects of market volatilities on Aurora Investment 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 Aurora Investment with a short position of OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and OTP Bank.
Diversification Opportunities for Aurora Investment and OTP Bank
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aurora and OTP is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust 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 Aurora Investment 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 Aurora Investment Trust 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 Aurora Investment i.e., Aurora Investment and OTP Bank go up and down completely randomly.
Pair Corralation between Aurora Investment and OTP Bank
Assuming the 90 days trading horizon Aurora Investment is expected to generate 6.27 times less return on investment than OTP Bank. But when comparing it to its historical volatility, Aurora Investment Trust is 5.13 times less risky than OTP Bank. It trades about 0.02 of its potential returns per unit of risk. 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 7, 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 |
Aurora Investment Trust vs. OTP Bank Nyrt
Performance |
| Timeline |
| Aurora Investment Trust |
| OTP Bank Nyrt |
Aurora Investment and OTP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Investment and OTP Bank
The main advantage of trading using opposite Aurora Investment and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Investment 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.| Aurora Investment vs. Primorus Investments plc | Aurora Investment vs. Smithson Investment Trust | Aurora Investment vs. JB Hunt Transport | Aurora Investment vs. Darden Restaurants |
| OTP Bank vs. Martin Marietta Materials | OTP Bank vs. Pressure Technologies Plc | OTP Bank vs. Polar Capital Technology | OTP Bank vs. Travel Leisure 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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