Correlation Between Cairo Communication and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Lundin Mining 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 Lundin Mining 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 Lundin Mining Corp, you can compare the effects of market volatilities on Cairo Communication and Lundin Mining 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 Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Lundin Mining.
Diversification Opportunities for Cairo Communication and Lundin Mining
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cairo and Lundin is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp 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 Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Cairo Communication i.e., Cairo Communication and Lundin Mining go up and down completely randomly.
Pair Corralation between Cairo Communication and Lundin Mining
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.7 times more return on investment than Lundin Mining. However, Cairo Communication SpA is 1.43 times less risky than Lundin Mining. It trades about 0.1 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about 0.02 per unit of risk. If you would invest 165.00 in Cairo Communication SpA on November 3, 2024 and sell it today you would earn a total of 89.00 from holding Cairo Communication SpA or generate 53.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Lundin Mining Corp
Performance |
| Timeline |
| Cairo Communication SpA |
| Lundin Mining Corp |
Cairo Communication and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Lundin Mining
The main advantage of trading using opposite Cairo Communication and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| Cairo Communication vs. Golden Metal Resources | Cairo Communication vs. Trainline Plc | Cairo Communication vs. United Utilities Group | Cairo Communication vs. Darden Restaurants |
| Lundin Mining vs. Bankers Investment Trust | Lundin Mining vs. Metro Bank PLC | Lundin Mining vs. Southwest Airlines Co | Lundin Mining vs. McEwen Mining |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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