Correlation Between Reka Industrial and Viafin Service

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

Diversification Opportunities for Reka Industrial and Viafin Service

-0.75

Correlation Coefficient

Reka Industrial  Viafin Service

Pay attention - limited upside

The 3 months correlation between Reka and Viafin is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Viafin Service Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viafin Service 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 Viafin Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viafin Service Oyj has no effect on the direction of Reka Industrial i.e., Reka Industrial and Viafin Service go up and down completely randomly.

Pair Corralation between Reka Industrial and Viafin Service

Assuming the 90 days trading horizon Reka Industrial Oyj is expected to under-perform the Viafin Service. In addition to that, Reka Industrial is 1.76 times more volatile than Viafin Service Oyj. It trades about -0.03 of its total potential returns per unit of risk. Viafin Service Oyj is currently generating about 0.07 per unit of volatility. If you would invest  1,810  in Viafin Service Oyj on October 8, 2024 and sell it today you would earn a total of  90.00  from holding Viafin Service Oyj or generate 4.97% return on investment over 90 days.

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

Reka Industrial Oyj  vs.  Viafin Service Oyj

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.

Viafin Service Oyj

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viafin Service Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Viafin Service is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reka Industrial and Viafin Service

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

The idea behind Reka Industrial Oyj and Viafin Service 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.