Correlation Between Nordea Bank and Reka Industrial
Can any of the company-specific risk be diversified away by investing in both Nordea Bank 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 Nordea Bank and Reka Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordea Bank Abp and Reka Industrial Oyj, you can compare the effects of market volatilities on Nordea Bank 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 Nordea Bank with a short position of Reka Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Reka Industrial.
Diversification Opportunities for Nordea Bank and Reka Industrial
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordea and Reka is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp 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 Nordea 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 Nordea Bank Abp 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 Nordea Bank i.e., Nordea Bank and Reka Industrial go up and down completely randomly.
Pair Corralation between Nordea Bank and Reka Industrial
Assuming the 90 days trading horizon Nordea Bank Abp is expected to under-perform the Reka Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Nordea Bank Abp is 2.35 times less risky than Reka Industrial. The stock trades about -0.13 of its potential returns per unit of risk. The Reka Industrial Oyj is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 495.00 in Reka Industrial Oyj on August 28, 2024 and sell it today you would lose (15.00) from holding Reka Industrial Oyj or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Reka Industrial Oyj
Performance |
| Timeline |
| Nordea Bank Abp |
| Reka Industrial Oyj |
Nordea Bank and Reka Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Reka Industrial
The main advantage of trading using opposite Nordea Bank and Reka Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank 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.| Nordea Bank vs. Sampo Oyj A | Nordea Bank vs. Fortum Oyj | Nordea Bank vs. UPM Kymmene Oyj | Nordea Bank vs. Neste Oil Oyj |
| Reka Industrial vs. Oma Saastopankki Oyj | Reka Industrial vs. Optomed PLC | Reka Industrial vs. Aspocomp Group Oyj | Reka Industrial vs. Tecnotree Oyj |
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 CEOs Directory module to screen CEOs from public companies around the world.
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