Correlation Between Reacap Financial and Faisal Islamic
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Faisal Islamic 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 Faisal Islamic 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 Faisal Islamic Bank, you can compare the effects of market volatilities on Reacap Financial and Faisal Islamic 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 Faisal Islamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Faisal Islamic.
Diversification Opportunities for Reacap Financial and Faisal Islamic
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reacap and Faisal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Faisal Islamic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faisal Islamic 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 Faisal Islamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faisal Islamic Bank has no effect on the direction of Reacap Financial i.e., Reacap Financial and Faisal Islamic go up and down completely randomly.
Pair Corralation between Reacap Financial and Faisal Islamic
Assuming the 90 days trading horizon Reacap Financial Investments is expected to under-perform the Faisal Islamic. But the stock apears to be less risky and, when comparing its historical volatility, Reacap Financial Investments is 1.18 times less risky than Faisal Islamic. The stock trades about -0.37 of its potential returns per unit of risk. The Faisal Islamic Bank is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 4,223 in Faisal Islamic Bank on September 19, 2024 and sell it today you would lose (300.00) from holding Faisal Islamic Bank or give up 7.1% 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. Faisal Islamic Bank
Performance |
| Timeline |
| Reacap Financial Inv |
| Faisal Islamic Bank |
Reacap Financial and Faisal Islamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reacap Financial and Faisal Islamic
The main advantage of trading using opposite Reacap Financial and Faisal Islamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Faisal Islamic 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 Faisal Islamic will offset losses from the drop in Faisal Islamic's long position.| Reacap Financial vs. Mohandes Insurance | Reacap Financial vs. Egyptian Transport | Reacap Financial vs. Orascom Financial Holding | Reacap Financial vs. Housing Development Bank |
| Faisal Islamic vs. Paint Chemicals Industries | Faisal Islamic vs. Reacap Financial Investments | Faisal Islamic vs. Egyptians For Investment | Faisal Islamic 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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