Correlation Between Reacap Financial and Juhayna Food

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

Diversification Opportunities for Reacap Financial and Juhayna Food

0.79

Correlation Coefficient

Reacap Financial  Juhayna Food

Poor diversification

The 3 months correlation between Reacap and Juhayna is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Juhayna Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juhayna Food Industries 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 Juhayna Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juhayna Food Industries has no effect on the direction of Reacap Financial i.e., Reacap Financial and Juhayna Food go up and down completely randomly.

Pair Corralation between Reacap Financial and Juhayna Food

Assuming the 90 days trading horizon Reacap Financial is expected to generate 50.24 times less return on investment than Juhayna Food. But when comparing it to its historical volatility, Reacap Financial Investments is 1.68 times less risky than Juhayna Food. It trades about 0.0 of its potential returns per unit of risk. Juhayna Food Industries is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,486  in Juhayna Food Industries on September 17, 2024 and sell it today you would earn a total of  639.00  from holding Juhayna Food Industries or generate 25.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.11%
Values	Daily Returns

Reacap Financial Investments  vs.  Juhayna Food Industries

Reacap Financial Inv

Risk-Adjusted Performance

0 of 100

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.

Juhayna Food Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Juhayna Food Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Juhayna Food reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reacap Financial and Juhayna Food

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

The idea behind Reacap Financial Investments and Juhayna Food Industries 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 Anywhere module to track or share privately all of your investments from the convenience of any device.