Correlation Between Reka Industrial and Nightingale Health
Can any of the company-specific risk be diversified away by investing in both Reka Industrial and Nightingale Health 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 Nightingale Health 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 Nightingale Health Oyj, you can compare the effects of market volatilities on Reka Industrial and Nightingale Health 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 Nightingale Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reka Industrial and Nightingale Health.
Diversification Opportunities for Reka Industrial and Nightingale Health
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reka and Nightingale is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Nightingale Health Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nightingale Health 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 Nightingale Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nightingale Health Oyj has no effect on the direction of Reka Industrial i.e., Reka Industrial and Nightingale Health go up and down completely randomly.
Pair Corralation between Reka Industrial and Nightingale Health
Assuming the 90 days trading horizon Reka Industrial is expected to generate 33.59 times less return on investment than Nightingale Health. But when comparing it to its historical volatility, Reka Industrial Oyj is 2.26 times less risky than Nightingale Health. It trades about 0.01 of its potential returns per unit of risk. Nightingale Health Oyj is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 102.00 in Nightingale Health Oyj on August 30, 2024 and sell it today you would earn a total of 212.00 from holding Nightingale Health Oyj or generate 207.84% 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. Nightingale Health Oyj
Performance |
| Timeline |
| Reka Industrial Oyj |
| Nightingale Health Oyj |
Reka Industrial and Nightingale Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reka Industrial and Nightingale Health
The main advantage of trading using opposite Reka Industrial and Nightingale Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reka Industrial position performs unexpectedly, Nightingale Health 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 Nightingale Health will offset losses from the drop in Nightingale Health's long position.| Reka Industrial vs. Optomed PLC | Reka Industrial vs. Tecnotree Oyj | Reka Industrial vs. Tokmanni Group Oyj | Reka Industrial vs. CapMan Oyj B |
| Nightingale Health vs. CapMan Oyj B | Nightingale Health vs. HKFoods Oyj A | Nightingale Health vs. Spinnova Oy | Nightingale Health vs. KONE 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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