Correlation Between Reacap Financial and Ezz Steel
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Ezz Steel 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 Ezz Steel 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 Ezz Steel, you can compare the effects of market volatilities on Reacap Financial and Ezz Steel 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 Ezz Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Ezz Steel.
Diversification Opportunities for Reacap Financial and Ezz Steel
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reacap and Ezz is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Ezz Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ezz Steel 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 Ezz Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ezz Steel has no effect on the direction of Reacap Financial i.e., Reacap Financial and Ezz Steel go up and down completely randomly.
Pair Corralation between Reacap Financial and Ezz Steel
Assuming the 90 days trading horizon Reacap Financial Investments is expected to under-perform the Ezz Steel. But the stock apears to be less risky and, when comparing its historical volatility, Reacap Financial Investments is 1.06 times less risky than Ezz Steel. The stock trades about -0.39 of its potential returns per unit of risk. The Ezz Steel is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 11,500 in Ezz Steel on September 12, 2024 and sell it today you would lose (845.00) from holding Ezz Steel or give up 7.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reacap Financial Investments vs. Ezz Steel
Performance |
| Timeline |
| Reacap Financial Inv |
| Ezz Steel |
Reacap Financial and Ezz Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reacap Financial and Ezz Steel
The main advantage of trading using opposite Reacap Financial and Ezz Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Ezz Steel 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 Ezz Steel will offset losses from the drop in Ezz Steel's long position.| Reacap Financial vs. Al Arafa Investment | Reacap Financial vs. El Ahli Investment | Reacap Financial vs. ODIN Investments | Reacap Financial vs. Cairo For Investment |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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