Correlation Between Reacap Financial and Zahraa Maadi
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Zahraa Maadi 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 Zahraa Maadi 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 Zahraa Maadi Investment, you can compare the effects of market volatilities on Reacap Financial and Zahraa Maadi 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 Zahraa Maadi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Zahraa Maadi.
Diversification Opportunities for Reacap Financial and Zahraa Maadi
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reacap and Zahraa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Zahraa Maadi Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zahraa Maadi Investment 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 Zahraa Maadi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zahraa Maadi Investment has no effect on the direction of Reacap Financial i.e., Reacap Financial and Zahraa Maadi go up and down completely randomly.
Pair Corralation between Reacap Financial and Zahraa Maadi
Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 0.78 times more return on investment than Zahraa Maadi. However, Reacap Financial Investments is 1.28 times less risky than Zahraa Maadi. It trades about 0.08 of its potential returns per unit of risk. Zahraa Maadi Investment is currently generating about 0.04 per unit of risk. If you would invest 371.00 in Reacap Financial Investments on September 3, 2024 and sell it today you would earn a total of 327.00 from holding Reacap Financial Investments or generate 88.14% 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. Zahraa Maadi Investment
Performance |
| Timeline |
| Reacap Financial Inv |
| Zahraa Maadi Investment |
Reacap Financial and Zahraa Maadi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reacap Financial and Zahraa Maadi
The main advantage of trading using opposite Reacap Financial and Zahraa Maadi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Zahraa Maadi 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 Zahraa Maadi will offset losses from the drop in Zahraa Maadi'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 |
| Zahraa Maadi vs. Paint Chemicals Industries | Zahraa Maadi vs. Reacap Financial Investments | Zahraa Maadi vs. Egyptians For Investment | Zahraa Maadi 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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