Correlation Between Arab Co and Reacap Financial

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

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

Diversification Opportunities for Arab Co and Reacap Financial

-0.5

Correlation Coefficient

Arab Co  Reacap Financial

Very good diversification

The 3 months correlation between Arab and Reacap is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Arab Co for 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 Arab Co 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 Arab Co for 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 Arab Co i.e., Arab Co and Reacap Financial go up and down completely randomly.

Pair Corralation between Arab Co and Reacap Financial

Assuming the 90 days trading horizon Arab Co for is expected to under-perform the Reacap Financial. But the stock apears to be less risky and, when comparing its historical volatility, Arab Co for is 1.67 times less risky than Reacap Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Reacap Financial Investments is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  744.00  in Reacap Financial Investments on April 25, 2025 and sell it today you would earn a total of  134.00  from holding Reacap Financial Investments or generate 18.01% return on investment over 90 days.

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

Arab Co for  vs.  Reacap Financial Investments

Arab Co for

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arab Co for has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Arab Co is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Reacap Financial Inv

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Reacap Financial Investments are ranked lower than 11 (%) 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 Arab Co and Reacap Financial

The main advantage of trading using opposite Arab Co and Reacap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arab Co 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 Arab Co for 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.