Correlation Between Reka Industrial and Viking Line

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

Diversification Opportunities for Reka Industrial and Viking Line

-0.18

Correlation Coefficient

Reka Industrial  Viking Line

Good diversification

The 3 months correlation between Reka and Viking is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Viking Line Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Line Abp 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 Viking Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Line Abp has no effect on the direction of Reka Industrial i.e., Reka Industrial and Viking Line go up and down completely randomly.

Pair Corralation between Reka Industrial and Viking Line

Assuming the 90 days trading horizon Reka Industrial is expected to generate 7.8 times less return on investment than Viking Line. In addition to that, Reka Industrial is 1.71 times more volatile than Viking Line Abp. It trades about 0.01 of its total potential returns per unit of risk. Viking Line Abp is currently generating about 0.09 per unit of volatility. If you would invest  2,060  in Viking Line Abp on December 21, 2024 and sell it today you would earn a total of  210.00  from holding Viking Line Abp or generate 10.19% 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.  Viking Line Abp

Reka Industrial Oyj

Risk-Adjusted Performance

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.

Viking Line Abp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viking Line Abp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Viking Line may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Reka Industrial and Viking Line

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

The idea behind Reka Industrial Oyj and Viking Line Abp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.