Correlation Between Reacap Financial and Pyramisa Hotels

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

Diversification Opportunities for Reacap Financial and Pyramisa Hotels

-0.47

Correlation Coefficient

Reacap Financial  Pyramisa Hotels

Very good diversification

The 3 months correlation between Reacap and Pyramisa is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Pyramisa Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyramisa Hotels 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 Pyramisa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyramisa Hotels has no effect on the direction of Reacap Financial i.e., Reacap Financial and Pyramisa Hotels go up and down completely randomly.

Pair Corralation between Reacap Financial and Pyramisa Hotels

Assuming the 90 days trading horizon Reacap Financial Investments is expected to under-perform the Pyramisa Hotels. In addition to that, Reacap Financial is 2.52 times more volatile than Pyramisa Hotels. It trades about -0.32 of its total potential returns per unit of risk. Pyramisa Hotels is currently generating about -0.24 per unit of volatility. If you would invest  13,443  in Pyramisa Hotels on September 15, 2024 and sell it today you would lose (496.00) from holding Pyramisa Hotels or give up 3.69% of portfolio value over 90 days.

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

Reacap Financial Investments  vs.  Pyramisa Hotels

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.

Pyramisa Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyramisa Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Reacap Financial and Pyramisa Hotels

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

The idea behind Reacap Financial Investments and Pyramisa Hotels 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.