Correlation Between Reacap Financial and Egypt Aluminum
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Egypt Aluminum 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 Egypt Aluminum 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 Egypt Aluminum, you can compare the effects of market volatilities on Reacap Financial and Egypt Aluminum 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 Egypt Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Egypt Aluminum.
Diversification Opportunities for Reacap Financial and Egypt Aluminum
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reacap and Egypt is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Egypt Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egypt Aluminum 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 Egypt Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egypt Aluminum has no effect on the direction of Reacap Financial i.e., Reacap Financial and Egypt Aluminum go up and down completely randomly.
Pair Corralation between Reacap Financial and Egypt Aluminum
Assuming the 90 days trading horizon Reacap Financial Investments is expected to under-perform the Egypt Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Reacap Financial Investments is 2.8 times less risky than Egypt Aluminum. The stock trades about -0.08 of its potential returns per unit of risk. The Egypt Aluminum is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 11,700 in Egypt Aluminum on November 4, 2024 and sell it today you would earn a total of 3,590 from holding Egypt Aluminum or generate 30.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reacap Financial Investments vs. Egypt Aluminum
Performance |
| Timeline |
| Reacap Financial Inv |
| Egypt Aluminum |
Reacap Financial and Egypt Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reacap Financial and Egypt Aluminum
The main advantage of trading using opposite Reacap Financial and Egypt Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Egypt Aluminum 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 Egypt Aluminum will offset losses from the drop in Egypt Aluminum's long position.| Reacap Financial vs. Egyptian Media Production | Reacap Financial vs. Faisal Islamic Bank | Reacap Financial vs. Mohandes Insurance | Reacap Financial vs. QALA For Financial |
| Egypt Aluminum vs. Reacap Financial Investments | Egypt Aluminum vs. Inter Cairo For Aluminum | Egypt Aluminum vs. Arabia Investments Holding | Egypt Aluminum vs. Delta Construction Rebuilding |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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