Correlation Between Egyptian Iron and Reacap Financial
Can any of the company-specific risk be diversified away by investing in both Egyptian Iron 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 Egyptian Iron and Reacap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Egyptian Iron Steel and Reacap Financial Investments, you can compare the effects of market volatilities on Egyptian Iron 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 Egyptian Iron with a short position of Reacap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Egyptian Iron and Reacap Financial.
Diversification Opportunities for Egyptian Iron and Reacap Financial
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Egyptian and Reacap is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Egyptian Iron 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 Egyptian Iron 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 Egyptian Iron 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 Egyptian Iron i.e., Egyptian Iron and Reacap Financial go up and down completely randomly.
Pair Corralation between Egyptian Iron and Reacap Financial
Assuming the 90 days trading horizon Egyptian Iron Steel is expected to generate 1.45 times more return on investment than Reacap Financial. However, Egyptian Iron is 1.45 times more volatile than Reacap Financial Investments. It trades about 0.25 of its potential returns per unit of risk. Reacap Financial Investments is currently generating about 0.12 per unit of risk. If you would invest 1,600 in Egyptian Iron Steel on September 3, 2024 and sell it today you would earn a total of 3,559 from holding Egyptian Iron Steel or generate 222.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Egyptian Iron Steel vs. Reacap Financial Investments
Performance |
| Timeline |
| Egyptian Iron Steel |
| Reacap Financial Inv |
Egyptian Iron and Reacap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Egyptian Iron and Reacap Financial
The main advantage of trading using opposite Egyptian Iron and Reacap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egyptian Iron 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.| Egyptian Iron vs. Paint Chemicals Industries | Egyptian Iron vs. Egyptians For Investment | Egyptian Iron vs. Misr Oils Soap | Egyptian Iron 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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