Correlation Between Otp Bank and Seneca Foods

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

Diversification Opportunities for Otp Bank and Seneca Foods

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between OTPBF and Seneca is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Otp Bank and Seneca Foods Cp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seneca Foods Cp 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 Seneca Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seneca Foods Cp has no effect on the direction of Otp Bank i.e., Otp Bank and Seneca Foods go up and down completely randomly.

Pair Corralation between Otp Bank and Seneca Foods

Assuming the 90 days horizon Otp Bank is expected to generate 4.27 times less return on investment than Seneca Foods. In addition to that, Otp Bank is 1.84 times more volatile than Seneca Foods Cp. It trades about 0.01 of its total potential returns per unit of risk. Seneca Foods Cp is currently generating about 0.06 per unit of volatility. If you would invest  3,894  in Seneca Foods Cp on August 29, 2022 and sell it today you would earn a total of  2,602  from holding Seneca Foods Cp or generate 66.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Otp Bank  vs.  Seneca Foods Cp

 Performance (%) 
       Timeline  
Otp Bank 
OTPBF Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Otp Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Otp Bank is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

OTPBF Price Channel

Seneca Foods Cp 
Seneca Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Cp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Seneca Price Channel

Otp Bank and Seneca Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Otp Bank and Seneca Foods

The main advantage of trading using opposite Otp Bank and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otp Bank position performs unexpectedly, Seneca Foods 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 Seneca Foods will offset losses from the drop in Seneca Foods' long position.
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The idea behind Otp Bank and Seneca Foods Cp 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.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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