Correlation Between Misr National and Reacap Financial
Can any of the company-specific risk be diversified away by investing in both Misr National 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 Misr National and Reacap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Misr National Steel and Reacap Financial Investments, you can compare the effects of market volatilities on Misr National 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 Misr National with a short position of Reacap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misr National and Reacap Financial.
Diversification Opportunities for Misr National and Reacap Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Misr and Reacap is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Misr National Steel 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 Misr National 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 Misr National Steel 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 Misr National i.e., Misr National and Reacap Financial go up and down completely randomly.
Pair Corralation between Misr National and Reacap Financial
Assuming the 90 days trading horizon Misr National Steel is expected to generate 0.71 times more return on investment than Reacap Financial. However, Misr National Steel is 1.41 times less risky than Reacap Financial. It trades about -0.01 of its potential returns per unit of risk. Reacap Financial Investments is currently generating about -0.09 per unit of risk. If you would invest 531.00 in Misr National Steel on August 30, 2024 and sell it today you would lose (4.00) from holding Misr National Steel or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Misr National Steel vs. Reacap Financial Investments
Performance |
| Timeline |
| Misr National Steel |
| Reacap Financial Inv |
Misr National and Reacap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Misr National and Reacap Financial
The main advantage of trading using opposite Misr National and Reacap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Misr National 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.| Misr National vs. Paint Chemicals Industries | Misr National vs. Egyptians For Investment | Misr National vs. Misr Oils Soap | Misr National vs. Global Telecom Holding |
| Reacap Financial vs. Paint Chemicals Industries | Reacap Financial vs. Egyptians For Investment | Reacap Financial vs. Misr Oils Soap | Reacap Financial vs. Global Telecom Holding |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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