Correlation Between Cairo Communication and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Eiffage SA 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 Cairo Communication and Eiffage SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Communication SpA and Eiffage SA, you can compare the effects of market volatilities on Cairo Communication and Eiffage SA 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 Cairo Communication with a short position of Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Eiffage SA.
Diversification Opportunities for Cairo Communication and Eiffage SA
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairo and Eiffage is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Eiffage SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA and Cairo Communication 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 Cairo Communication SpA are associated (or correlated) with Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA has no effect on the direction of Cairo Communication i.e., Cairo Communication and Eiffage SA go up and down completely randomly.
Pair Corralation between Cairo Communication and Eiffage SA
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 1.35 times more return on investment than Eiffage SA. However, Cairo Communication is 1.35 times more volatile than Eiffage SA. It trades about 0.09 of its potential returns per unit of risk. Eiffage SA is currently generating about -0.02 per unit of risk. If you would invest 225.00 in Cairo Communication SpA on August 26, 2024 and sell it today you would earn a total of 7.00 from holding Cairo Communication SpA or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Eiffage SA
Performance |
| Timeline |
| Cairo Communication SpA |
| Eiffage SA |
Cairo Communication and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Eiffage SA
The main advantage of trading using opposite Cairo Communication and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Eiffage SA 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 Eiffage SA will offset losses from the drop in Eiffage SA's long position.| Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Hyundai Motor | Cairo Communication vs. Toyota Motor Corp |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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