Correlation Between Alma Media and Reka Industrial
Can any of the company-specific risk be diversified away by investing in both Alma Media and Reka Industrial 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 Alma Media and Reka Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alma Media Oyj and Reka Industrial Oyj, you can compare the effects of market volatilities on Alma Media and Reka Industrial 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 Alma Media with a short position of Reka Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alma Media and Reka Industrial.
Diversification Opportunities for Alma Media and Reka Industrial
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alma and Reka is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alma Media Oyj and Reka Industrial Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reka Industrial Oyj and Alma Media 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 Alma Media Oyj are associated (or correlated) with Reka Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reka Industrial Oyj has no effect on the direction of Alma Media i.e., Alma Media and Reka Industrial go up and down completely randomly.
Pair Corralation between Alma Media and Reka Industrial
Assuming the 90 days trading horizon Alma Media Oyj is expected to generate 0.79 times more return on investment than Reka Industrial. However, Alma Media Oyj is 1.26 times less risky than Reka Industrial. It trades about 0.05 of its potential returns per unit of risk. Reka Industrial Oyj is currently generating about 0.01 per unit of risk. If you would invest 905.00 in Alma Media Oyj on August 30, 2024 and sell it today you would earn a total of 245.00 from holding Alma Media Oyj or generate 27.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alma Media Oyj vs. Reka Industrial Oyj
Performance |
| Timeline |
| Alma Media Oyj |
| Reka Industrial Oyj |
Alma Media and Reka Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alma Media and Reka Industrial
The main advantage of trading using opposite Alma Media and Reka Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alma Media position performs unexpectedly, Reka Industrial 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 Reka Industrial will offset losses from the drop in Reka Industrial's long position.| Alma Media vs. Tokmanni Group Oyj | Alma Media vs. Kemira Oyj | Alma Media vs. Elisa Oyj | Alma Media vs. Valmet Oyj |
| Reka Industrial vs. Optomed PLC | Reka Industrial vs. Tecnotree Oyj | Reka Industrial vs. Tokmanni Group Oyj | Reka Industrial vs. CapMan Oyj B |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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