Correlation Between Reacap Financial and Nile City

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

Diversification Opportunities for Reacap Financial and Nile City

0.0

Correlation Coefficient

Reacap Financial  Nile City

Pay attention - limited upside

The 3 months correlation between Reacap and Nile is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Nile City Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nile City 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 Nile City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nile City Investment has no effect on the direction of Reacap Financial i.e., Reacap Financial and Nile City go up and down completely randomly.

Pair Corralation between Reacap Financial and Nile City

If you would invest  621.00  in Reacap Financial Investments on September 13, 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	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Reacap Financial Investments  vs.  Nile City Investment

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.

Nile City Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Reacap Financial and Nile City

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

The idea behind Reacap Financial Investments and Nile City Investment 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.