Correlation Between Reacap Financial and International Agricultural

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

Diversification Opportunities for Reacap Financial and International Agricultural

0.67

Correlation Coefficient

Reacap Financial  International Agricultural

Poor diversification

The 3 months correlation between Reacap and International is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and International Agricultural Pro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Agricultural 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 International Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Agricultural has no effect on the direction of Reacap Financial i.e., Reacap Financial and International Agricultural go up and down completely randomly.

Pair Corralation between Reacap Financial and International Agricultural

Assuming the 90 days trading horizon Reacap Financial Investments is expected to under-perform the International Agricultural. In addition to that, Reacap Financial is 1.36 times more volatile than International Agricultural Products. It trades about -0.3 of its total potential returns per unit of risk. International Agricultural Products is currently generating about -0.25 per unit of volatility. If you would invest  1,978  in International Agricultural Products on September 17, 2024 and sell it today you would lose (138.00) from holding International Agricultural Products or give up 6.98% of portfolio value over 90 days.

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

Reacap Financial Investments  vs.  International Agricultural Pro

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.

International Agricultural

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Agricultural Products are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, International Agricultural reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reacap Financial and International Agricultural

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

The idea behind Reacap Financial Investments and International Agricultural Products 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.