Correlation Between Reacap Financial and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Egyptian Gulf 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 Egyptian Gulf 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 Egyptian Gulf Bank, you can compare the effects of market volatilities on Reacap Financial and Egyptian Gulf 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 Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Egyptian Gulf.
Diversification Opportunities for Reacap Financial and Egyptian Gulf
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reacap and Egyptian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank 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 Egyptian Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of Reacap Financial i.e., Reacap Financial and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Reacap Financial and Egyptian Gulf
Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 1.2 times more return on investment than Egyptian Gulf. However, Reacap Financial is 1.2 times more volatile than Egyptian Gulf Bank. It trades about 0.09 of its potential returns per unit of risk. Egyptian Gulf Bank is currently generating about -0.05 per unit of risk. If you would invest 480.00 in Reacap Financial Investments on September 3, 2024 and sell it today you would earn a total of 218.00 from holding Reacap Financial Investments or generate 45.42% 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. Egyptian Gulf Bank
Performance |
| Timeline |
| Reacap Financial Inv |
| Egyptian Gulf Bank |
Reacap Financial and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reacap Financial and Egyptian Gulf
The main advantage of trading using opposite Reacap Financial and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Egyptian Gulf 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 Egyptian Gulf will offset losses from the drop in Egyptian Gulf'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 |
| Egyptian Gulf vs. Paint Chemicals Industries | Egyptian Gulf vs. Reacap Financial Investments | Egyptian Gulf vs. Egyptians For Investment | Egyptian Gulf 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |