Correlation Between Orascom Financial and Reacap Financial
Can any of the company-specific risk be diversified away by investing in both Orascom Financial and Reacap Financial 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 Orascom Financial and Reacap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orascom Financial Holding and Reacap Financial Investments, you can compare the effects of market volatilities on Orascom Financial and Reacap Financial 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 Orascom Financial with a short position of Reacap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orascom Financial and Reacap Financial.
Diversification Opportunities for Orascom Financial and Reacap Financial
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orascom and Reacap is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Orascom Financial Holding and Reacap Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reacap Financial Inv and Orascom 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 Orascom Financial Holding are associated (or correlated) with Reacap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reacap Financial Inv has no effect on the direction of Orascom Financial i.e., Orascom Financial and Reacap Financial go up and down completely randomly.
Pair Corralation between Orascom Financial and Reacap Financial
Assuming the 90 days trading horizon Orascom Financial Holding is expected to generate 1.03 times more return on investment than Reacap Financial. However, Orascom Financial is 1.03 times more volatile than Reacap Financial Investments. It trades about 0.13 of its potential returns per unit of risk. Reacap Financial Investments is currently generating about 0.08 per unit of risk. If you would invest 33.00 in Orascom Financial Holding on September 16, 2024 and sell it today you would earn a total of 7.00 from holding Orascom Financial Holding or generate 21.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Orascom Financial Holding vs. Reacap Financial Investments
Performance |
Timeline |
Orascom Financial Holding |
Reacap Financial Inv |
Orascom Financial and Reacap Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Orascom Financial and Reacap Financial
The main advantage of trading using opposite Orascom Financial and Reacap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orascom Financial position performs unexpectedly, Reacap Financial 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 Reacap Financial will offset losses from the drop in Reacap Financial's long position.Orascom Financial vs. Reacap Financial Investments | Orascom Financial vs. ODIN Investments | Orascom Financial vs. Al Khair River | Orascom Financial vs. National Drilling |
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Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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