Correlation Between OTP Bank and EON SE
Can any of the company-specific risk be diversified away by investing in both OTP Bank and EON 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 EON 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 EON SE, you can compare the effects of market volatilities on OTP Bank and EON 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 EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and EON SE.
Diversification Opportunities for OTP Bank and EON SE
Very weak diversification
The 3 months correlation between OTP and EON is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON 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 EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of OTP Bank i.e., OTP Bank and EON SE go up and down completely randomly.
Pair Corralation between OTP Bank and EON SE
Assuming the 90 days trading horizon OTP Bank is expected to generate 815.94 times less return on investment than EON SE. But when comparing it to its historical volatility, OTP Bank Nyrt is 285.09 times less risky than EON SE. It trades about 0.14 of its potential returns per unit of risk. EON SE is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 398,552 in EON SE on August 31, 2024 and sell it today you would earn a total of 97,948 from holding EON SE or generate 24.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 47.72% |
| Values | Daily Returns |
OTP Bank Nyrt vs. EON SE
Performance |
| Timeline |
| OTP Bank Nyrt |
| EON SE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
OTP Bank and EON SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and EON SE
The main advantage of trading using opposite OTP Bank and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, EON 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 EON SE will offset losses from the drop in EON SE's long position.| OTP Bank vs. NordTelekom Telecommunications Service | OTP Bank vs. CIG Pannonia Life | OTP Bank vs. Delta Technologies Nyrt | OTP Bank 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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