Correlation Between Otp Bank and BRASIL ON

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

Diversification Opportunities for Otp Bank and BRASIL ON

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between OTPBF and BRASIL is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Otp Bank and BRASIL ON NM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRASIL ON NM 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 are associated (or correlated) with BRASIL ON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRASIL ON NM has no effect on the direction of Otp Bank i.e., Otp Bank and BRASIL ON go up and down completely randomly.

Pair Corralation between Otp Bank and BRASIL ON

Assuming the 90 days horizon Otp Bank is expected to under-perform the BRASIL ON. In addition to that, Otp Bank is 3.42 times more volatile than BRASIL ON NM. It trades about -0.03 of its total potential returns per unit of risk. BRASIL ON NM is currently generating about 0.05 per unit of volatility. If you would invest  2,843  in BRASIL ON NM on May 19, 2022 and sell it today you would earn a total of  1,477  from holding BRASIL ON NM or generate 51.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.59%
ValuesDaily Returns

Otp Bank  vs.  BRASIL ON NM

 Performance (%) 
       Timeline  
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 sluggish performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in September 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

OTPBF Price Channel

BRASIL ON NM 
BRASIL Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BRASIL ON NM are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BRASIL ON reported solid returns over the last few months and may actually be approaching a breakup point.

BRASIL Price Channel

Otp Bank and BRASIL ON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Otp Bank and BRASIL ON

The main advantage of trading using opposite Otp Bank and BRASIL ON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otp Bank position performs unexpectedly, BRASIL ON 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 BRASIL ON will offset losses from the drop in BRASIL ON's long position.
The idea behind Otp Bank and BRASIL ON NM 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.

BRASIL ON NM

Pair trading matchups for BRASIL ON

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against BRASIL ON as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. BRASIL ON's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, BRASIL ON's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to BRASIL ON NM.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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