Correlation Between Viafin Service and Reka Industrial

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

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

Diversification Opportunities for Viafin Service and Reka Industrial

-0.36

Correlation Coefficient

Viafin Service  Reka Industrial

Very good diversification

The 3 months correlation between Viafin and Reka is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Viafin Service 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 Viafin Service 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 Viafin Service 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 Viafin Service i.e., Viafin Service and Reka Industrial go up and down completely randomly.

Pair Corralation between Viafin Service and Reka Industrial

Assuming the 90 days trading horizon Viafin Service is expected to generate 39.36 times less return on investment than Reka Industrial. But when comparing it to its historical volatility, Viafin Service Oyj is 3.94 times less risky than Reka Industrial. It trades about 0.05 of its potential returns per unit of risk. Reka Industrial Oyj is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  443.00  in Reka Industrial Oyj on October 23, 2024 and sell it today you would earn a total of  107.00  from holding Reka Industrial Oyj or generate 24.15% return on investment over 90 days.

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

Viafin Service Oyj  vs.  Reka Industrial Oyj

Viafin Service Oyj

Risk-Adjusted Performance

5 of 100

Modest

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 current stock price disturbance, may contribute to short-term losses for the investors.

Reka Industrial Oyj

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reka Industrial Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Reka Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Viafin Service and Reka Industrial

The main advantage of trading using opposite Viafin Service and Reka Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viafin Service 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 Viafin Service 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.