Correlation Between CapMan Oyj and Reka Industrial

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

Diversification Opportunities for CapMan Oyj and Reka Industrial

0.65

Correlation Coefficient

CapMan Oyj  Reka Industrial

Poor diversification

The 3 months correlation between CapMan and Reka is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CapMan Oyj B 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 CapMan 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 CapMan Oyj B 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 CapMan Oyj i.e., CapMan Oyj and Reka Industrial go up and down completely randomly.

Pair Corralation between CapMan Oyj and Reka Industrial

Assuming the 90 days trading horizon CapMan Oyj B is expected to generate 0.63 times more return on investment than Reka Industrial. However, CapMan Oyj B is 1.58 times less risky than Reka Industrial. It trades about 0.03 of its potential returns per unit of risk. Reka Industrial Oyj is currently generating about 0.01 per unit of risk. If you would invest  171.00  in CapMan Oyj B on September 12, 2024 and sell it today you would earn a total of  4.00  from holding CapMan Oyj B or generate 2.34% return on investment over 90 days.

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

CapMan Oyj B  vs.  Reka Industrial Oyj

CapMan Oyj B

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CapMan Oyj B are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CapMan Oyj is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Reka Industrial Oyj

Risk-Adjusted Performance

0 of 100

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 CapMan Oyj and Reka Industrial

The main advantage of trading using opposite CapMan Oyj and Reka Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapMan 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 CapMan Oyj B 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.