Correlation Between Al Tawfeek and Reacap Financial
Can any of the company-specific risk be diversified away by investing in both Al Tawfeek and Reacap Financial 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 Al Tawfeek and Reacap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Al Tawfeek Leasing and Reacap Financial Investments, you can compare the effects of market volatilities on Al Tawfeek and Reacap Financial 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 Al Tawfeek with a short position of Reacap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Al Tawfeek and Reacap Financial.
Diversification Opportunities for Al Tawfeek and Reacap Financial
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ATLC and Reacap is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Al Tawfeek Leasing and Reacap Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reacap Financial Inv and Al Tawfeek 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 Al Tawfeek Leasing are associated (or correlated) with Reacap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reacap Financial Inv has no effect on the direction of Al Tawfeek i.e., Al Tawfeek and Reacap Financial go up and down completely randomly.
Pair Corralation between Al Tawfeek and Reacap Financial
Assuming the 90 days trading horizon Al Tawfeek Leasing is expected to under-perform the Reacap Financial. In addition to that, Al Tawfeek is 1.06 times more volatile than Reacap Financial Investments. It trades about -0.22 of its total potential returns per unit of risk. Reacap Financial Investments is currently generating about -0.08 per unit of volatility. If you would invest 654.00 in Reacap Financial Investments on November 5, 2024 and sell it today you would lose (14.00) from holding Reacap Financial Investments or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Al Tawfeek Leasing vs. Reacap Financial Investments
Performance |
| Timeline |
| Al Tawfeek Leasing |
| Reacap Financial Inv |
Al Tawfeek and Reacap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Al Tawfeek and Reacap Financial
The main advantage of trading using opposite Al Tawfeek and Reacap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Tawfeek position performs unexpectedly, Reacap Financial 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 Reacap Financial will offset losses from the drop in Reacap Financial's long position.| Al Tawfeek vs. Cairo For Investment | Al Tawfeek vs. Misr Financial Investments | Al Tawfeek vs. Nile City Investment | Al Tawfeek vs. Egyptian Financial Industrial |
| Reacap Financial vs. Pyramisa Hotels | Reacap Financial vs. Misr Hotels | Reacap Financial vs. Credit Agricole Egypt | Reacap Financial vs. Misr Financial Investments |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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