Correlation Between OTP Bank and OBSERVE MEDICAL
Can any of the company-specific risk be diversified away by investing in both OTP Bank and OBSERVE MEDICAL 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 OBSERVE MEDICAL 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 OBSERVE MEDICAL ASA, you can compare the effects of market volatilities on OTP Bank and OBSERVE MEDICAL 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 OBSERVE MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and OBSERVE MEDICAL.
Diversification Opportunities for OTP Bank and OBSERVE MEDICAL
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between OTP and OBSERVE is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and OBSERVE MEDICAL ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBSERVE MEDICAL ASA 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 OBSERVE MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBSERVE MEDICAL ASA has no effect on the direction of OTP Bank i.e., OTP Bank and OBSERVE MEDICAL go up and down completely randomly.
Pair Corralation between OTP Bank and OBSERVE MEDICAL
Assuming the 90 days horizon OTP Bank is expected to generate 13.52 times less return on investment than OBSERVE MEDICAL. But when comparing it to its historical volatility, OTP Bank Nyrt is 15.73 times less risky than OBSERVE MEDICAL. It trades about 0.08 of its potential returns per unit of risk. OBSERVE MEDICAL ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 178.00 in OBSERVE MEDICAL ASA on October 26, 2024 and sell it today you would lose (146.00) from holding OBSERVE MEDICAL ASA or give up 82.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
OTP Bank Nyrt vs. OBSERVE MEDICAL ASA
Performance |
| Timeline |
| OTP Bank Nyrt |
| OBSERVE MEDICAL ASA |
OTP Bank and OBSERVE MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and OBSERVE MEDICAL
The main advantage of trading using opposite OTP Bank and OBSERVE MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank position performs unexpectedly, OBSERVE MEDICAL 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 OBSERVE MEDICAL will offset losses from the drop in OBSERVE MEDICAL's long position.| OTP Bank vs. Cairo Communication SpA | OTP Bank vs. Geely Automobile Holdings | OTP Bank vs. SENECA FOODS A | OTP Bank vs. Singapore Telecommunications Limited |
| OBSERVE MEDICAL vs. Virtus Investment Partners | OBSERVE MEDICAL vs. INTER CARS SA | OBSERVE MEDICAL vs. New Residential Investment | OBSERVE MEDICAL vs. HK Electric Investments |
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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