Correlation Between Cairo Communication and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Yum Brands 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 Yum Brands 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 Yum Brands, you can compare the effects of market volatilities on Cairo Communication and Yum Brands 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 Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Yum Brands.
Diversification Opportunities for Cairo Communication and Yum Brands
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cairo and Yum is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands 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 Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Cairo Communication i.e., Cairo Communication and Yum Brands go up and down completely randomly.
Pair Corralation between Cairo Communication and Yum Brands
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.36 times more return on investment than Yum Brands. However, Cairo Communication SpA is 2.79 times less risky than Yum Brands. It trades about 0.07 of its potential returns per unit of risk. Yum Brands is currently generating about 0.02 per unit of risk. If you would invest 156.00 in Cairo Communication SpA on August 31, 2024 and sell it today you would earn a total of 80.00 from holding Cairo Communication SpA or generate 51.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.68% |
| Values | Daily Returns |
Cairo Communication SpA vs. Yum Brands
Performance |
| Timeline |
| Cairo Communication SpA |
| Yum Brands |
Cairo Communication and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Yum Brands
The main advantage of trading using opposite Cairo Communication and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Yum Brands 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 Yum Brands will offset losses from the drop in Yum Brands' long position.| Cairo Communication vs. Cornish Metals | Cairo Communication vs. Neometals | Cairo Communication vs. Endeavour Mining Corp | Cairo Communication vs. Wheaton Precious Metals |
| Yum Brands vs. Zegona Communications Plc | Yum Brands vs. United Internet AG | Yum Brands vs. Zoom Video Communications | Yum Brands vs. Spirent Communications plc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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