Correlation Between Reacap Financial and Lotus For
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Lotus For 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 Lotus For 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 Lotus For Agricultural, you can compare the effects of market volatilities on Reacap Financial and Lotus For 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 Lotus For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Lotus For.
Diversification Opportunities for Reacap Financial and Lotus For
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reacap and Lotus is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Lotus For Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus For Agricultural 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 Lotus For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus For Agricultural has no effect on the direction of Reacap Financial i.e., Reacap Financial and Lotus For go up and down completely randomly.
Pair Corralation between Reacap Financial and Lotus For
Assuming the 90 days trading horizon Reacap Financial is expected to generate 1.95 times less return on investment than Lotus For. But when comparing it to its historical volatility, Reacap Financial Investments is 1.97 times less risky than Lotus For. It trades about 0.12 of its potential returns per unit of risk. Lotus For Agricultural is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Lotus For Agricultural on September 12, 2024 and sell it today you would earn a total of 22.00 from holding Lotus For Agricultural or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 29.45% |
| Values | Daily Returns |
Reacap Financial Investments vs. Lotus For Agricultural
Performance |
| Timeline |
| Reacap Financial Inv |
| Lotus For Agricultural |
Reacap Financial and Lotus For Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reacap Financial and Lotus For
The main advantage of trading using opposite Reacap Financial and Lotus For positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Lotus For 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 Lotus For will offset losses from the drop in Lotus For'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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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