Correlation Between Reacap Financial and Ismailia National

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

Diversification Opportunities for Reacap Financial and Ismailia National

0.35

Correlation Coefficient

Reacap Financial  Ismailia National

Weak diversification

The 3 months correlation between Reacap and Ismailia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Ismailia National Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ismailia National Food 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 Ismailia National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ismailia National Food has no effect on the direction of Reacap Financial i.e., Reacap Financial and Ismailia National go up and down completely randomly.

Pair Corralation between Reacap Financial and Ismailia National

Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 0.73 times more return on investment than Ismailia National. However, Reacap Financial Investments is 1.38 times less risky than Ismailia National. It trades about 0.08 of its potential returns per unit of risk. Ismailia National Food is currently generating about 0.02 per unit of risk. If you would invest  471.00  in Reacap Financial Investments on September 19, 2024 and sell it today you would earn a total of  194.00  from holding Reacap Financial Investments or generate 41.19% return on investment over 90 days.

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

Reacap Financial Investments  vs.  Ismailia National Food

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 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.

Ismailia National Food

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ismailia National Food are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ismailia National 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 Ismailia National

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

The idea behind Reacap Financial Investments and Ismailia National Food 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.