Correlation Between Betolar Oyj and Reka Industrial

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

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

Diversification Opportunities for Betolar Oyj and Reka Industrial

0.79

Correlation Coefficient

Betolar Oyj  Reka Industrial

Poor diversification

The 3 months correlation between Betolar and Reka is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Betolar 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 Betolar Oyj 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 Betolar 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 Betolar Oyj i.e., Betolar Oyj and Reka Industrial go up and down completely randomly.

Pair Corralation between Betolar Oyj and Reka Industrial

Assuming the 90 days trading horizon Betolar Oyj is expected to under-perform the Reka Industrial. In addition to that, Betolar Oyj is 1.14 times more volatile than Reka Industrial Oyj. It trades about -0.13 of its total potential returns per unit of risk. Reka Industrial Oyj is currently generating about 0.09 per unit of volatility. If you would invest  473.00  in Reka Industrial Oyj on October 10, 2024 and sell it today you would earn a total of  17.00  from holding Reka Industrial Oyj or generate 3.59% return on investment over 90 days.

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

Betolar Oyj  vs.  Reka Industrial Oyj

Betolar Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Betolar Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 Betolar Oyj and Reka Industrial

The main advantage of trading using opposite Betolar Oyj and Reka Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Betolar Oyj 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 Betolar 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.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.