Correlation Between Reka Industrial and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Reka Industrial and Fortum Oyj 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 Fortum Oyj 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 Fortum Oyj, you can compare the effects of market volatilities on Reka Industrial and Fortum Oyj 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 Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reka Industrial and Fortum Oyj.
Diversification Opportunities for Reka Industrial and Fortum Oyj
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Reka and Fortum is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum 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 Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of Reka Industrial i.e., Reka Industrial and Fortum Oyj go up and down completely randomly.
Pair Corralation between Reka Industrial and Fortum Oyj
Assuming the 90 days trading horizon Reka Industrial Oyj is expected to generate 1.55 times more return on investment than Fortum Oyj. However, Reka Industrial is 1.55 times more volatile than Fortum Oyj. It trades about 0.43 of its potential returns per unit of risk. Fortum Oyj is currently generating about 0.0 per unit of risk. If you would invest 465.00 in Reka Industrial Oyj on November 3, 2024 and sell it today you would earn a total of 133.00 from holding Reka Industrial Oyj or generate 28.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reka Industrial Oyj vs. Fortum Oyj
Performance |
| Timeline |
| Reka Industrial Oyj |
| Fortum Oyj |
Reka Industrial and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reka Industrial and Fortum Oyj
The main advantage of trading using opposite Reka Industrial and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reka Industrial position performs unexpectedly, Fortum Oyj 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 Fortum Oyj will offset losses from the drop in Fortum Oyj'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 |
| Fortum Oyj vs. HKFoods Oyj A | Fortum Oyj vs. Nightingale Health Oyj | Fortum Oyj vs. Alandsbanken Abp B | Fortum Oyj vs. Finnair 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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