Correlation Between Microsoft Corp and Otp Bank

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Can any of the company-specific risk be diversified away by investing in both Microsoft Corp 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 Microsoft Corp and Otp Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp and Otp Bank, you can compare the effects of market volatilities on Microsoft Corp 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 Microsoft Corp with a short position of Otp Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Otp Bank.

Diversification Opportunities for Microsoft Corp and Otp Bank

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Microsoft and OTPBF is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and Otp Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otp Bank and Microsoft Corp 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 Microsoft Corp 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 has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Otp Bank go up and down completely randomly.

Pair Corralation between Microsoft Corp and Otp Bank

Given the investment horizon of 90 days Microsoft Corp is expected to generate 0.37 times more return on investment than Otp Bank. However, Microsoft Corp is 2.67 times less risky than Otp Bank. It trades about 0.03 of its potential returns per unit of risk. Otp Bank is currently generating about 0.01 per unit of risk. If you would invest  20,906  in Microsoft Corp on June 30, 2022 and sell it today you would earn a total of  3,201  from holding Microsoft Corp or generate 15.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Microsoft Corp  vs.  Otp Bank

 Performance (%) 
       Timeline  
Microsoft Corp 
Microsoft Performance
0 of 100
Over the last 90 days Microsoft Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Microsoft Corp is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Microsoft Price Channel

Otp Bank 
OTPBF Performance
0 of 100
Over the last 90 days Otp Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

OTPBF Price Channel

Microsoft Corp and Otp Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft Corp and Otp Bank

The main advantage of trading using opposite Microsoft Corp and Otp Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp 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.
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The idea behind Microsoft Corp and Otp Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Otp Bank vs. Microsoft Corp
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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