Correlation Between OBSERVE MEDICAL and OTP Bank
Can any of the company-specific risk be diversified away by investing in both OBSERVE MEDICAL 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 OBSERVE MEDICAL and OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBSERVE MEDICAL ASA and OTP Bank Nyrt, you can compare the effects of market volatilities on OBSERVE MEDICAL 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 OBSERVE MEDICAL with a short position of OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBSERVE MEDICAL and OTP Bank.
Diversification Opportunities for OBSERVE MEDICAL and OTP Bank
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between OBSERVE and OTP is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding OBSERVE MEDICAL ASA 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 OBSERVE MEDICAL 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 OBSERVE MEDICAL ASA 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 OBSERVE MEDICAL i.e., OBSERVE MEDICAL and OTP Bank go up and down completely randomly.
Pair Corralation between OBSERVE MEDICAL and OTP Bank
Assuming the 90 days trading horizon OBSERVE MEDICAL ASA is expected to generate 15.72 times more return on investment than OTP Bank. However, OBSERVE MEDICAL is 15.72 times more volatile than OTP Bank Nyrt. It trades about 0.07 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.08 per unit of risk. If you would invest 178.00 in OBSERVE MEDICAL ASA on October 27, 2024 and sell it today you would lose (151.00) from holding OBSERVE MEDICAL ASA or give up 84.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
OBSERVE MEDICAL ASA vs. OTP Bank Nyrt
Performance |
| Timeline |
| OBSERVE MEDICAL ASA |
| OTP Bank Nyrt |
OBSERVE MEDICAL and OTP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBSERVE MEDICAL and OTP Bank
The main advantage of trading using opposite OBSERVE MEDICAL and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBSERVE MEDICAL 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.| OBSERVE MEDICAL vs. Virtus Investment Partners | OBSERVE MEDICAL vs. INTER CARS SA | OBSERVE MEDICAL vs. New Residential Investment | OBSERVE MEDICAL vs. HK Electric Investments |
| OTP Bank vs. Cairo Communication SpA | OTP Bank vs. Geely Automobile Holdings | OTP Bank vs. SENECA FOODS A | OTP Bank vs. Singapore Telecommunications Limited |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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