Correlation Between Reka Industrial and Harvia Oyj

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

Diversification Opportunities for Reka Industrial and Harvia Oyj

0.46

Correlation Coefficient

Reka Industrial  Harvia Oyj

Very weak diversification

The 3 months correlation between Reka and Harvia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Reka Industrial Oyj and Harvia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvia 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 Harvia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvia Oyj has no effect on the direction of Reka Industrial i.e., Reka Industrial and Harvia Oyj go up and down completely randomly.

Pair Corralation between Reka Industrial and Harvia Oyj

Assuming the 90 days trading horizon Reka Industrial is expected to generate 5.72 times less return on investment than Harvia Oyj. In addition to that, Reka Industrial is 1.13 times more volatile than Harvia Oyj. It trades about 0.01 of its total potential returns per unit of risk. Harvia Oyj is currently generating about 0.06 per unit of volatility. If you would invest  4,075  in Harvia Oyj on September 14, 2024 and sell it today you would earn a total of  285.00  from holding Harvia Oyj or generate 6.99% return on investment over 90 days.

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

Reka Industrial Oyj  vs.  Harvia 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Harvia Oyj

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harvia Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Harvia Oyj may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Reka Industrial and Harvia Oyj

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

The idea behind Reka Industrial Oyj and Harvia 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.