Correlation Between OTP Bank and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both OTP Bank and Cairo Communication 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 Cairo Communication 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 Cairo Communication SpA, you can compare the effects of market volatilities on OTP Bank and Cairo Communication 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 Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and Cairo Communication.
Diversification Opportunities for OTP Bank and Cairo Communication
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OTP and Cairo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA 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 Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of OTP Bank i.e., OTP Bank and Cairo Communication go up and down completely randomly.
Pair Corralation between OTP Bank and Cairo Communication
Assuming the 90 days horizon OTP Bank Nyrt is expected to generate 1.34 times more return on investment than Cairo Communication. However, OTP Bank is 1.34 times more volatile than Cairo Communication SpA. It trades about 0.25 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.11 per unit of risk. If you would invest 5,276 in OTP Bank Nyrt on October 28, 2024 and sell it today you would earn a total of 502.00 from holding OTP Bank Nyrt or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OTP Bank Nyrt vs. Cairo Communication SpA
Performance |
| Timeline |
| OTP Bank Nyrt |
| Cairo Communication SpA |
OTP Bank and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and Cairo Communication
The main advantage of trading using opposite OTP Bank and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.| OTP Bank vs. Zurich Insurance Group | OTP Bank vs. HANOVER INSURANCE | OTP Bank vs. SBI Insurance Group | OTP Bank vs. Tencent Music Entertainment |
| Cairo Communication vs. Apple Inc | Cairo Communication vs. Apple Inc | Cairo Communication vs. Apple Inc | Cairo Communication vs. Apple Inc |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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