Correlation Between Reacap Financial and Al Baraka
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Al Baraka 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 Al Baraka 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 Al Baraka Bank, you can compare the effects of market volatilities on Reacap Financial and Al Baraka 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 Al Baraka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Al Baraka.
Diversification Opportunities for Reacap Financial and Al Baraka
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reacap and SAUD is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Al Baraka Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Baraka 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 Al Baraka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Baraka Bank has no effect on the direction of Reacap Financial i.e., Reacap Financial and Al Baraka go up and down completely randomly.
Pair Corralation between Reacap Financial and Al Baraka
Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 1.69 times more return on investment than Al Baraka. However, Reacap Financial is 1.69 times more volatile than Al Baraka Bank. It trades about 0.13 of its potential returns per unit of risk. Al Baraka Bank is currently generating about 0.16 per unit of risk. If you would invest 475.00 in Reacap Financial Investments on September 13, 2024 and sell it today you would earn a total of 216.00 from holding Reacap Financial Investments or generate 45.47% 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. Al Baraka Bank
Performance |
| Timeline |
| Reacap Financial Inv |
| Al Baraka Bank |
Reacap Financial and Al Baraka Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reacap Financial and Al Baraka
The main advantage of trading using opposite Reacap Financial and Al Baraka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Al Baraka 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 Al Baraka will offset losses from the drop in Al Baraka's long position.| Reacap Financial vs. Paint Chemicals Industries | Reacap Financial vs. Egyptians For Investment | Reacap Financial vs. Misr Oils Soap | Reacap Financial vs. Ismailia Development and |
| Al Baraka vs. Paint Chemicals Industries | Al Baraka vs. Reacap Financial Investments | Al Baraka vs. Egyptians For Investment | Al Baraka 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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