Correlation Between A Capital and Reacap Financial

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

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

Diversification Opportunities for A Capital and Reacap Financial

0.82

Correlation Coefficient

A Capital  Reacap Financial

Very poor diversification

The 3 months correlation between ACAP and Reacap is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding A Capital Holding 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 A Capital 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 A Capital Holding 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 A Capital i.e., A Capital and Reacap Financial go up and down completely randomly.

Pair Corralation between A Capital and Reacap Financial

Assuming the 90 days trading horizon A Capital Holding is expected to generate 1.12 times more return on investment than Reacap Financial. However, A Capital is 1.12 times more volatile than Reacap Financial Investments. It trades about 0.21 of its potential returns per unit of risk. Reacap Financial Investments is currently generating about 0.15 per unit of risk. If you would invest  266.00  in A Capital Holding on February 3, 2025 and sell it today you would earn a total of  67.00  from holding A Capital Holding or generate 25.19% return on investment over 90 days.

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

A Capital Holding  vs.  Reacap Financial Investments

A Capital Holding

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A Capital Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, A Capital reported solid returns over the last few months and may actually be approaching a breakup point.

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 weak 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 A Capital and Reacap Financial

The main advantage of trading using opposite A Capital and Reacap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A Capital 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 A Capital Holding 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.