Correlation Between Reacap Financial and General Silos

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

Diversification Opportunities for Reacap Financial and General Silos

0.59

Correlation Coefficient

Reacap Financial  General Silos

Very weak diversification

The 3 months correlation between Reacap and General is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and General Silos Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Silos Storage 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 General Silos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Silos Storage has no effect on the direction of Reacap Financial i.e., Reacap Financial and General Silos go up and down completely randomly.

Pair Corralation between Reacap Financial and General Silos

Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 0.85 times more return on investment than General Silos. However, Reacap Financial Investments is 1.18 times less risky than General Silos. It trades about -0.3 of its potential returns per unit of risk. General Silos Storage is currently generating about -0.85 per unit of risk. If you would invest  778.00  in Reacap Financial Investments on September 17, 2024 and sell it today you would lose (87.00) from holding Reacap Financial Investments or give up 11.18% of portfolio value over 90 days.

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

Reacap Financial Investments  vs.  General Silos Storage

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.

General Silos Storage

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Reacap Financial and General Silos

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

The idea behind Reacap Financial Investments and General Silos Storage 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.