Correlation Between OTP Bank and BASF SE
Can any of the company-specific risk be diversified away by investing in both OTP Bank and BASF SE 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 BASF SE 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 BASF SE, you can compare the effects of market volatilities on OTP Bank and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and BASF SE.
Diversification Opportunities for OTP Bank and BASF SE
Very good diversification
The 3 months correlation between OTP and BASF is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of OTP Bank i.e., OTP Bank and BASF SE go up and down completely randomly.
Pair Corralation between OTP Bank and BASF SE
Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 0.75 times more return on investment than BASF SE. However, OTP Bank Nyrt is 1.33 times less risky than BASF SE. It trades about 0.35 of its potential returns per unit of risk. BASF SE is currently generating about -0.11 per unit of risk. If you would invest 1,875,000 in OTP Bank Nyrt on September 4, 2024 and sell it today you would earn a total of 247,000 from holding OTP Bank Nyrt or generate 13.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.64% |
| Values | Daily Returns |
OTP Bank Nyrt vs. BASF SE
Performance |
| Timeline |
| OTP Bank Nyrt |
| BASF SE |
OTP Bank and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and BASF SE
The main advantage of trading using opposite OTP Bank and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| OTP Bank vs. NordTelekom Telecommunications Service | OTP Bank vs. Nutex Investments PLC | OTP Bank vs. AKKO Invest Nyrt | OTP Bank vs. Raba Jarmuipari Holding |
| BASF SE vs. NordTelekom Telecommunications Service | BASF SE vs. Delta Technologies Nyrt | BASF SE vs. Nutex Investments PLC | BASF SE vs. Commerzbank AG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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