Correlation Between Reacap Financial and Fawry For

Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Fawry 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 Fawry 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 Fawry For Banking, you can compare the effects of market volatilities on Reacap Financial and Fawry 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 Fawry For. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Fawry For.

Diversification Opportunities for Reacap Financial and Fawry For

0.62

Correlation Coefficient

Reacap Financial  Fawry For

Poor diversification

The 3 months correlation between Reacap and Fawry is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Fawry For Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fawry For Banking 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 Fawry For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fawry For Banking has no effect on the direction of Reacap Financial i.e., Reacap Financial and Fawry For go up and down completely randomly.

Pair Corralation between Reacap Financial and Fawry For

Assuming the 90 days trading horizon Reacap Financial is expected to generate 3.04 times less return on investment than Fawry For. In addition to that, Reacap Financial is 1.34 times more volatile than Fawry For Banking. It trades about 0.03 of its total potential returns per unit of risk. Fawry For Banking is currently generating about 0.12 per unit of volatility. If you would invest  780.00  in Fawry For Banking on September 17, 2024 and sell it today you would earn a total of  100.00  from holding Fawry For Banking or generate 12.82% 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.  Fawry For Banking

Reacap Financial Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reacap Financial Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Reacap Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fawry For Banking

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fawry For Banking are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Fawry For reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reacap Financial and Fawry For

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

The idea behind Reacap Financial Investments and Fawry For Banking 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.