Correlation Between Reka Industrial and Alma Media
Can any of the company-specific risk be diversified away by investing in both Reka Industrial and Alma Media 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 Alma Media 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 Alma Media Oyj, you can compare the effects of market volatilities on Reka Industrial and Alma Media 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 Alma Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reka Industrial and Alma Media.
Diversification Opportunities for Reka Industrial and Alma Media
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Reka and Alma is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Alma Media Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alma Media Oyj 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 Alma Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alma Media Oyj has no effect on the direction of Reka Industrial i.e., Reka Industrial and Alma Media go up and down completely randomly.
Pair Corralation between Reka Industrial and Alma Media
Assuming the 90 days trading horizon Reka Industrial is expected to generate 1.55 times less return on investment than Alma Media. In addition to that, Reka Industrial is 1.23 times more volatile than Alma Media Oyj. It trades about 0.02 of its total potential returns per unit of risk. Alma Media Oyj is currently generating about 0.04 per unit of volatility. If you would invest 862.00 in Alma Media Oyj on August 26, 2024 and sell it today you would earn a total of 273.00 from holding Alma Media Oyj or generate 31.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reka Industrial Oyj vs. Alma Media Oyj
Performance |
| Timeline |
| Reka Industrial Oyj |
| Alma Media Oyj |
Reka Industrial and Alma Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reka Industrial and Alma Media
The main advantage of trading using opposite Reka Industrial and Alma Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reka Industrial position performs unexpectedly, Alma Media 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 Alma Media will offset losses from the drop in Alma Media's long position.| Reka Industrial vs. Oma Saastopankki Oyj | Reka Industrial vs. Tecnotree Oyj | Reka Industrial vs. Tokmanni Group Oyj | Reka Industrial vs. Vaisala Oyj A |
| Alma Media vs. Tokmanni Group Oyj | Alma Media vs. Kemira Oyj | Alma Media vs. Elisa Oyj | Alma Media vs. Valmet 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 Correlations module to find global opportunities by holding instruments from different markets.
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