Correlation Between Rea and Oakridge International
Can any of the company-specific risk be diversified away by investing in both Rea and Oakridge International 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 Rea and Oakridge International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rea Group and Oakridge International, you can compare the effects of market volatilities on Rea and Oakridge International 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 Rea with a short position of Oakridge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rea and Oakridge International.
Diversification Opportunities for Rea and Oakridge International
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rea and Oakridge is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Rea Group and Oakridge International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakridge International and Rea 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 Rea Group are associated (or correlated) with Oakridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakridge International has no effect on the direction of Rea i.e., Rea and Oakridge International go up and down completely randomly.
Pair Corralation between Rea and Oakridge International
Assuming the 90 days trading horizon Rea Group is expected to generate 0.34 times more return on investment than Oakridge International. However, Rea Group is 2.94 times less risky than Oakridge International. It trades about 0.04 of its potential returns per unit of risk. Oakridge International is currently generating about -0.07 per unit of risk. If you would invest 23,914 in Rea Group on September 12, 2024 and sell it today you would earn a total of 265.00 from holding Rea Group or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rea Group vs. Oakridge International
Performance |
| Timeline |
| Rea Group |
| Oakridge International |
Rea and Oakridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rea and Oakridge International
The main advantage of trading using opposite Rea and Oakridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rea position performs unexpectedly, Oakridge International 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 Oakridge International will offset losses from the drop in Oakridge International's long position.| Rea vs. Microequities Asset Management | Rea vs. Hutchison Telecommunications | Rea vs. Advanced Braking Technology | Rea vs. Spirit Telecom |
| Oakridge International vs. CSL | Oakridge International vs. Tamawood | Oakridge International vs. Cochlear | Oakridge International vs. Rea Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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