Correlation Between Reka Industrial and Betolar Oyj

Can any of the company-specific risk be diversified away by investing in both Reka Industrial and Betolar 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 Betolar 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 Betolar Oyj, you can compare the effects of market volatilities on Reka Industrial and Betolar 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 Betolar Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reka Industrial and Betolar Oyj.

Diversification Opportunities for Reka Industrial and Betolar Oyj

0.1

Correlation Coefficient

Reka Industrial  Betolar Oyj

Average diversification

The 3 months correlation between Reka and Betolar is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Betolar Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betolar 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 Betolar Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betolar Oyj has no effect on the direction of Reka Industrial i.e., Reka Industrial and Betolar Oyj go up and down completely randomly.

Pair Corralation between Reka Industrial and Betolar Oyj

Assuming the 90 days trading horizon Reka Industrial Oyj is expected to generate 0.65 times more return on investment than Betolar Oyj. However, Reka Industrial Oyj is 1.55 times less risky than Betolar Oyj. It trades about 0.05 of its potential returns per unit of risk. Betolar Oyj is currently generating about -0.2 per unit of risk. If you would invest  522.00  in Reka Industrial Oyj on October 24, 2024 and sell it today you would earn a total of  36.00  from holding Reka Industrial Oyj or generate 6.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.75%
Values	Daily Returns

Reka Industrial Oyj  vs.  Betolar Oyj

Reka Industrial Oyj

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reka Industrial Oyj are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Reka Industrial exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 inconsistent 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.

Pair Trading with Reka Industrial and Betolar Oyj

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

The idea behind Reka Industrial Oyj and Betolar 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.