Correlation Between BASF SE and OTP Bank
Can any of the company-specific risk be diversified away by investing in both BASF SE 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 BASF SE and OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE and OTP Bank Nyrt, you can compare the effects of market volatilities on BASF SE 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 BASF SE with a short position of OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and OTP Bank.
Diversification Opportunities for BASF SE and OTP Bank
Good diversification
The 3 months correlation between BASF and OTP is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE 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 BASF SE 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 BASF SE 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 BASF SE i.e., BASF SE and OTP Bank go up and down completely randomly.
Pair Corralation between BASF SE and OTP Bank
Assuming the 90 days trading horizon BASF SE is expected to generate 1.42 times more return on investment than OTP Bank. However, BASF SE is 1.42 times more volatile than OTP Bank Nyrt. It trades about 0.56 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about -0.02 per unit of risk. If you would invest 1,718,000 in BASF SE on September 18, 2024 and sell it today you would earn a total of 146,400 from holding BASF SE or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 36.36% |
| Values | Daily Returns |
BASF SE vs. OTP Bank Nyrt
Performance |
| Timeline |
| BASF SE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| OTP Bank Nyrt |
BASF SE and OTP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and OTP Bank
The main advantage of trading using opposite BASF SE and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE 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.| BASF SE vs. OTP Bank Nyrt | BASF SE vs. MOL Nyrt | BASF SE vs. OPUS GLOBAL Nyrt | BASF SE vs. ALTEO Energiaszolgaltato Nyrt |
| OTP Bank vs. NordTelekom Telecommunications Service | OTP Bank vs. Infineon Technologies AG | OTP Bank vs. Nutex Investments PLC | OTP Bank vs. AKKO Invest Nyrt |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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