Correlation Between Ismailia National and Reacap Financial

Can any of the company-specific risk be diversified away by investing in both Ismailia National and Reacap Financial 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 Ismailia National and Reacap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ismailia National Food and Reacap Financial Investments, you can compare the effects of market volatilities on Ismailia National and Reacap Financial 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 Ismailia National with a short position of Reacap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ismailia National and Reacap Financial.

Diversification Opportunities for Ismailia National and Reacap Financial

0.37

Correlation Coefficient

Ismailia National  Reacap Financial

Weak diversification

The 3 months correlation between Ismailia and Reacap is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ismailia National Food and Reacap Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reacap Financial Inv and Ismailia National 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 Ismailia National Food are associated (or correlated) with Reacap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reacap Financial Inv has no effect on the direction of Ismailia National i.e., Ismailia National and Reacap Financial go up and down completely randomly.

Pair Corralation between Ismailia National and Reacap Financial

Assuming the 90 days trading horizon Ismailia National is expected to generate 16.08 times less return on investment than Reacap Financial. But when comparing it to its historical volatility, Ismailia National Food is 1.78 times less risky than Reacap Financial. It trades about 0.01 of its potential returns per unit of risk. Reacap Financial Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  621.00  in Reacap Financial Investments on September 15, 2024 and sell it today you would earn a total of  70.00  from holding Reacap Financial Investments or generate 11.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ismailia National Food  vs.  Reacap Financial Investments

Ismailia National Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ismailia National Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ismailia National is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Reacap Financial Inv

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reacap Financial Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Reacap Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ismailia National and Reacap Financial

The main advantage of trading using opposite Ismailia National and Reacap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ismailia National position performs unexpectedly, Reacap Financial 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 Reacap Financial will offset losses from the drop in Reacap Financial's long position.

The idea behind Ismailia National Food and Reacap Financial Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.