Correlation Between Reacap Financial and Suez Canal

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

By analyzing existing cross correlation between Reacap Financial Investments and Suez Canal Bank, you can compare the effects of market volatilities on Reacap Financial and Suez Canal 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 Reacap Financial with a short position of Suez Canal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Suez Canal.

Diversification Opportunities for Reacap Financial and Suez Canal

-0.43

Correlation Coefficient

Reacap Financial  Suez Canal

Very good diversification

The 3 months correlation between Reacap and Suez is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Suez Canal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suez Canal Bank and Reacap 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 Reacap Financial Investments are associated (or correlated) with Suez Canal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suez Canal Bank has no effect on the direction of Reacap Financial i.e., Reacap Financial and Suez Canal go up and down completely randomly.

Pair Corralation between Reacap Financial and Suez Canal

Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 0.63 times more return on investment than Suez Canal. However, Reacap Financial Investments is 1.59 times less risky than Suez Canal. It trades about 0.08 of its potential returns per unit of risk. Suez Canal Bank is currently generating about 0.04 per unit of risk. If you would invest  322.00  in Reacap Financial Investments on October 21, 2024 and sell it today you would earn a total of  325.00  from holding Reacap Financial Investments or generate 100.93% return on investment over 90 days.

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

Reacap Financial Investments  vs.  Suez Canal Bank

Reacap Financial Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reacap Financial Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Suez Canal Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suez Canal Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Suez Canal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reacap Financial and Suez Canal

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

The idea behind Reacap Financial Investments and Suez Canal Bank 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.