Correlation Between Reacap Financial and Egyptian Media

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

Diversification Opportunities for Reacap Financial and Egyptian Media

0.74

Correlation Coefficient

Reacap Financial  Egyptian Media

Poor diversification

The 3 months correlation between Reacap and Egyptian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Egyptian Media Production in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Media Production 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 Egyptian Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Media Production has no effect on the direction of Reacap Financial i.e., Reacap Financial and Egyptian Media go up and down completely randomly.

Pair Corralation between Reacap Financial and Egyptian Media

Assuming the 90 days trading horizon Reacap Financial is expected to generate 2.85 times less return on investment than Egyptian Media. But when comparing it to its historical volatility, Reacap Financial Investments is 1.46 times less risky than Egyptian Media. It trades about 0.06 of its potential returns per unit of risk. Egyptian Media Production is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,848  in Egyptian Media Production on September 25, 2024 and sell it today you would earn a total of  388.00  from holding Egyptian Media Production or generate 21.0% return on investment over 90 days.

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

Reacap Financial Investments  vs.  Egyptian Media Production

Reacap Financial Inv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reacap Financial Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Reacap Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Egyptian Media Production

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Reacap Financial and Egyptian Media

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

The idea behind Reacap Financial Investments and Egyptian Media Production 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.