Correlation Between Reka Industrial and Dovre Group
Can any of the company-specific risk be diversified away by investing in both Reka Industrial and Dovre Group 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 Dovre Group 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 Dovre Group Plc, you can compare the effects of market volatilities on Reka Industrial and Dovre Group 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 Dovre Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reka Industrial and Dovre Group.
Diversification Opportunities for Reka Industrial and Dovre Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reka and Dovre is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Dovre Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dovre Group Plc 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 Dovre Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dovre Group Plc has no effect on the direction of Reka Industrial i.e., Reka Industrial and Dovre Group go up and down completely randomly.
Pair Corralation between Reka Industrial and Dovre Group
Assuming the 90 days trading horizon Reka Industrial Oyj is expected to generate 0.8 times more return on investment than Dovre Group. However, Reka Industrial Oyj is 1.25 times less risky than Dovre Group. It trades about 0.01 of its potential returns per unit of risk. Dovre Group Plc is currently generating about -0.02 per unit of risk. If you would invest 483.00 in Reka Industrial Oyj on September 12, 2024 and sell it today you would lose (13.00) from holding Reka Industrial Oyj or give up 2.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Reka Industrial Oyj vs. Dovre Group Plc
Performance |
| Timeline |
| Reka Industrial Oyj |
| Dovre Group Plc |
Reka Industrial and Dovre Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reka Industrial and Dovre Group
The main advantage of trading using opposite Reka Industrial and Dovre Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reka Industrial position performs unexpectedly, Dovre Group 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 Dovre Group will offset losses from the drop in Dovre Group'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 |
| Dovre Group vs. Sotkamo Silver AB | Dovre Group vs. Reka Industrial Oyj | Dovre Group vs. Aiforia Technologies Oyj | Dovre Group vs. Nordea Bank Abp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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