Correlation Between Reacap Financial and Cleopatra Hospital

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

Diversification Opportunities for Reacap Financial and Cleopatra Hospital

0.81

Correlation Coefficient

Reacap Financial  Cleopatra Hospital

Very poor diversification

The 3 months correlation between Reacap and Cleopatra is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Cleopatra Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleopatra Hospital 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 Cleopatra Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleopatra Hospital has no effect on the direction of Reacap Financial i.e., Reacap Financial and Cleopatra Hospital go up and down completely randomly.

Pair Corralation between Reacap Financial and Cleopatra Hospital

Assuming the 90 days trading horizon Reacap Financial is expected to generate 5.01 times less return on investment than Cleopatra Hospital. But when comparing it to its historical volatility, Reacap Financial Investments is 1.06 times less risky than Cleopatra Hospital. It trades about 0.03 of its potential returns per unit of risk. Cleopatra Hospital is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Cleopatra Hospital on September 18, 2024 and sell it today you would earn a total of  165.00  from holding Cleopatra Hospital or generate 25.78% return on investment over 90 days.

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

Reacap Financial Investments  vs.  Cleopatra Hospital

Reacap Financial Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reacap Financial Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Reacap Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cleopatra Hospital

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cleopatra Hospital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cleopatra Hospital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reacap Financial and Cleopatra Hospital

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

The idea behind Reacap Financial Investments and Cleopatra Hospital 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.