Correlation Between Reacap Financial and Edita Food
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Edita Food 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 Edita Food 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 Edita Food Industries, you can compare the effects of market volatilities on Reacap Financial and Edita Food 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 Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Edita Food.
Diversification Opportunities for Reacap Financial and Edita Food
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reacap and Edita is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries 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 Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Reacap Financial i.e., Reacap Financial and Edita Food go up and down completely randomly.
Pair Corralation between Reacap Financial and Edita Food
Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 1.05 times more return on investment than Edita Food. However, Reacap Financial is 1.05 times more volatile than Edita Food Industries. It trades about 0.11 of its potential returns per unit of risk. Edita Food Industries is currently generating about 0.08 per unit of risk. If you would invest 332.00 in Reacap Financial Investments on August 31, 2024 and sell it today you would earn a total of 366.00 from holding Reacap Financial Investments or generate 110.24% 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. Edita Food Industries
Performance |
| Timeline |
| Reacap Financial Inv |
| Edita Food Industries |
Reacap Financial and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reacap Financial and Edita Food
The main advantage of trading using opposite Reacap Financial and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| Reacap Financial vs. Paint Chemicals Industries | Reacap Financial vs. Egyptians For Investment | Reacap Financial vs. Misr Oils Soap | Reacap Financial vs. Global Telecom Holding |
| Edita Food vs. Paint Chemicals Industries | Edita Food vs. Reacap Financial Investments | Edita Food vs. Egyptians For Investment | Edita Food vs. Misr Oils Soap |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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