Correlation Between Reacap Financial and Industrial Engineering

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

Diversification Opportunities for Reacap Financial and Industrial Engineering

-0.43

Correlation Coefficient

Reacap Financial  Industrial Engineering

Very good diversification

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

Pair Corralation between Reacap Financial and Industrial Engineering

Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 1.38 times more return on investment than Industrial Engineering. However, Reacap Financial is 1.38 times more volatile than Industrial Engineering Projects. It trades about 0.08 of its potential returns per unit of risk. Industrial Engineering Projects is currently generating about 0.01 per unit of risk. If you would invest  621.00  in Reacap Financial Investments on September 15, 2024 and sell it today you would earn a total of  70.00  from holding Reacap Financial Investments or generate 11.27% 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.  Industrial Engineering Project

Reacap Financial Inv

Risk-Adjusted Performance

6 of 100

Modest

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

Industrial Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Engineering Projects has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Industrial Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Reacap Financial and Industrial Engineering

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

The idea behind Reacap Financial Investments and Industrial Engineering Projects 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.