Correlation Between Otp Bank and Mustang Bio

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

Diversification Opportunities for Otp Bank and Mustang Bio

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between OTPBF and Mustang is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Otp Bank and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio 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 Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of Otp Bank i.e., Otp Bank and Mustang Bio go up and down completely randomly.

Pair Corralation between Otp Bank and Mustang Bio

Assuming the 90 days horizon Otp Bank is expected to under-perform the Mustang Bio. But the otc stock apears to be less risky and, when comparing its historical volatility, Otp Bank is 7.9 times less risky than Mustang Bio. The otc stock trades about -0.22 of its potential returns per unit of risk. The Mustang Bio is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  59.00  in Mustang Bio on May 18, 2022 and sell it today you would earn a total of  15.00  from holding Mustang Bio or generate 25.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Otp Bank  vs.  Mustang Bio

 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 weak 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

Mustang Bio 
Mustang Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mustang Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Mustang Bio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mustang Price Channel

Otp Bank and Mustang Bio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Otp Bank and Mustang Bio

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

Otp Bank

Pair trading matchups for Otp Bank

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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 Otp Bank 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. Otp Bank'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, Otp Bank'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 Otp Bank.
The idea behind Otp Bank and Mustang Bio 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.

Mustang Bio

Pair trading matchups for Mustang Bio

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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