Correlation Between Cairo Communication and Anglo American
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Anglo American 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 Anglo American 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 Anglo American PLC, you can compare the effects of market volatilities on Cairo Communication and Anglo American 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 Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Anglo American.
Diversification Opportunities for Cairo Communication and Anglo American
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cairo and Anglo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Anglo American PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American PLC 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 Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American PLC has no effect on the direction of Cairo Communication i.e., Cairo Communication and Anglo American go up and down completely randomly.
Pair Corralation between Cairo Communication and Anglo American
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.92 times more return on investment than Anglo American. However, Cairo Communication SpA is 1.09 times less risky than Anglo American. It trades about 0.37 of its potential returns per unit of risk. Anglo American PLC is currently generating about 0.18 per unit of risk. If you would invest 217.00 in Cairo Communication SpA on September 12, 2024 and sell it today you would earn a total of 34.00 from holding Cairo Communication SpA or generate 15.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cairo Communication SpA vs. Anglo American PLC
Performance |
| Timeline |
| Cairo Communication SpA |
| Anglo American PLC |
Cairo Communication and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Anglo American
The main advantage of trading using opposite Cairo Communication and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| Cairo Communication vs. Jacquet Metal Service | Cairo Communication vs. Universal Music Group | Cairo Communication vs. Zegona Communications Plc | Cairo Communication vs. Sovereign Metals |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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