Correlation Between Magyar Telekom and OTP Bank
Can any of the company-specific risk be diversified away by investing in both Magyar Telekom 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 Magyar Telekom and OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magyar Telekom PLC and OTP Bank Nyrt, you can compare the effects of market volatilities on Magyar Telekom 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 Magyar Telekom with a short position of OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Telekom and OTP Bank.
Diversification Opportunities for Magyar Telekom and OTP Bank
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Magyar and OTP is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom PLC 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 Magyar Telekom 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 Magyar Telekom PLC 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 Magyar Telekom i.e., Magyar Telekom and OTP Bank go up and down completely randomly.
Pair Corralation between Magyar Telekom and OTP Bank
Assuming the 90 days trading horizon Magyar Telekom PLC is expected to generate 0.93 times more return on investment than OTP Bank. However, Magyar Telekom PLC is 1.07 times less risky than OTP Bank. It trades about 0.21 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.12 per unit of risk. If you would invest 32,600 in Magyar Telekom PLC on August 27, 2024 and sell it today you would earn a total of 91,800 from holding Magyar Telekom PLC or generate 281.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magyar Telekom PLC vs. OTP Bank Nyrt
Performance |
| Timeline |
| Magyar Telekom PLC |
| OTP Bank Nyrt |
Magyar Telekom and OTP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magyar Telekom and OTP Bank
The main advantage of trading using opposite Magyar Telekom and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Telekom 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.| Magyar Telekom vs. OTP Bank Nyrt | Magyar Telekom vs. MOL Nyrt | Magyar Telekom vs. OPUS GLOBAL Nyrt | Magyar Telekom vs. ALTEO Energiaszolgaltato Nyrt |
| OTP Bank vs. NordTelekom Telecommunications Service | OTP Bank vs. Nutex Investments PLC | OTP Bank vs. Delta Technologies 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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