Correlation Between Menif Financial and Rapac Communication

Can any of the company-specific risk be diversified away by investing in both Menif Financial and Rapac Communication 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 Menif Financial and Rapac Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Menif Financial Services and Rapac Communication Infrastructure, you can compare the effects of market volatilities on Menif Financial and Rapac Communication 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 Menif Financial with a short position of Rapac Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Menif Financial and Rapac Communication.

Diversification Opportunities for Menif Financial and Rapac Communication

0.94

Correlation Coefficient

Menif Financial  Rapac Communication

Almost no diversification

The 3 months correlation between Menif and Rapac is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Menif Financial Services and Rapac Communication Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapac Communication and Menif Financial 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 Menif Financial Services are associated (or correlated) with Rapac Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapac Communication has no effect on the direction of Menif Financial i.e., Menif Financial and Rapac Communication go up and down completely randomly.

Pair Corralation between Menif Financial and Rapac Communication

Assuming the 90 days trading horizon Menif Financial is expected to generate 1.75 times less return on investment than Rapac Communication. In addition to that, Menif Financial is 1.09 times more volatile than Rapac Communication Infrastructure. It trades about 0.18 of its total potential returns per unit of risk. Rapac Communication Infrastructure is currently generating about 0.34 per unit of volatility. If you would invest  260,000  in Rapac Communication Infrastructure on November 29, 2024 and sell it today you would earn a total of  115,000  from holding Rapac Communication Infrastructure or generate 44.23% return on investment over 90 days.

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

Menif Financial Services  vs.  Rapac Communication Infrastruc

Menif Financial Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Menif Financial Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Menif Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Rapac Communication

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Rapac Communication Infrastructure are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rapac Communication sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Menif Financial and Rapac Communication

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

The idea behind Menif Financial Services and Rapac Communication Infrastructure 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.