Correlation Between Reka Industrial and Alandsbanken Abp
Can any of the company-specific risk be diversified away by investing in both Reka Industrial and Alandsbanken Abp 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 Reka Industrial and Alandsbanken Abp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reka Industrial Oyj and Alandsbanken Abp A, you can compare the effects of market volatilities on Reka Industrial and Alandsbanken Abp 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 Reka Industrial with a short position of Alandsbanken Abp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reka Industrial and Alandsbanken Abp.
Diversification Opportunities for Reka Industrial and Alandsbanken Abp
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Reka and Alandsbanken is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Alandsbanken Abp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alandsbanken Abp A and Reka Industrial 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 Reka Industrial Oyj are associated (or correlated) with Alandsbanken Abp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alandsbanken Abp A has no effect on the direction of Reka Industrial i.e., Reka Industrial and Alandsbanken Abp go up and down completely randomly.
Pair Corralation between Reka Industrial and Alandsbanken Abp
Assuming the 90 days trading horizon Reka Industrial Oyj is expected to generate 2.35 times more return on investment than Alandsbanken Abp. However, Reka Industrial is 2.35 times more volatile than Alandsbanken Abp A. It trades about 0.0 of its potential returns per unit of risk. Alandsbanken Abp A is currently generating about -0.04 per unit of risk. If you would invest 487.00 in Reka Industrial Oyj on August 29, 2024 and sell it today you would lose (8.00) from holding Reka Industrial Oyj or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reka Industrial Oyj vs. Alandsbanken Abp A
Performance |
| Timeline |
| Reka Industrial Oyj |
| Alandsbanken Abp A |
Reka Industrial and Alandsbanken Abp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reka Industrial and Alandsbanken Abp
The main advantage of trading using opposite Reka Industrial and Alandsbanken Abp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reka Industrial position performs unexpectedly, Alandsbanken Abp 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 Alandsbanken Abp will offset losses from the drop in Alandsbanken Abp's long position.| Reka Industrial vs. Oma Saastopankki Oyj | Reka Industrial vs. Optomed PLC | Reka Industrial vs. Aspocomp Group Oyj | Reka Industrial vs. Tecnotree Oyj |
| Alandsbanken Abp vs. Aktia Bank Abp | Alandsbanken Abp vs. Alandsbanken Abp B | Alandsbanken Abp vs. CapMan Oyj B | Alandsbanken Abp vs. Tokmanni Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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