Correlation Between Aspocomp Group and Reka Industrial

Can any of the company-specific risk be diversified away by investing in both Aspocomp Group and Reka Industrial 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 Aspocomp Group and Reka Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aspocomp Group Oyj and Reka Industrial Oyj, you can compare the effects of market volatilities on Aspocomp Group and Reka Industrial 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 Aspocomp Group with a short position of Reka Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspocomp Group and Reka Industrial.

Diversification Opportunities for Aspocomp Group and Reka Industrial

-0.71

Correlation Coefficient

Aspocomp Group  Reka Industrial

Pay attention - limited upside

The 3 months correlation between Aspocomp and Reka is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aspocomp Group Oyj and Reka Industrial Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reka Industrial Oyj and Aspocomp Group 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 Aspocomp Group Oyj are associated (or correlated) with Reka Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reka Industrial Oyj has no effect on the direction of Aspocomp Group i.e., Aspocomp Group and Reka Industrial go up and down completely randomly.

Pair Corralation between Aspocomp Group and Reka Industrial

Assuming the 90 days trading horizon Aspocomp Group Oyj is expected to generate 0.89 times more return on investment than Reka Industrial. However, Aspocomp Group Oyj is 1.13 times less risky than Reka Industrial. It trades about 0.11 of its potential returns per unit of risk. Reka Industrial Oyj is currently generating about 0.09 per unit of risk. If you would invest  305.00  in Aspocomp Group Oyj on October 8, 2024 and sell it today you would earn a total of  13.00  from holding Aspocomp Group Oyj or generate 4.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Aspocomp Group Oyj  vs.  Reka Industrial Oyj

Aspocomp Group Oyj

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspocomp Group Oyj are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Aspocomp Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Reka Industrial Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reka Industrial Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Reka Industrial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aspocomp Group and Reka Industrial

The main advantage of trading using opposite Aspocomp Group and Reka Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspocomp Group position performs unexpectedly, Reka Industrial 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 Reka Industrial will offset losses from the drop in Reka Industrial's long position.

The idea behind Aspocomp Group Oyj and Reka Industrial Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.