Correlation Between Cairo Communication and Bank of Georgia
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Bank of Georgia 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 Bank of Georgia 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 Bank of Georgia, you can compare the effects of market volatilities on Cairo Communication and Bank of Georgia 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 Bank of Georgia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Bank of Georgia.
Diversification Opportunities for Cairo Communication and Bank of Georgia
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cairo and Bank is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Bank of Georgia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Georgia 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 Bank of Georgia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Georgia has no effect on the direction of Cairo Communication i.e., Cairo Communication and Bank of Georgia go up and down completely randomly.
Pair Corralation between Cairo Communication and Bank of Georgia
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.8 times more return on investment than Bank of Georgia. However, Cairo Communication SpA is 1.25 times less risky than Bank of Georgia. It trades about 0.1 of its potential returns per unit of risk. Bank of Georgia is currently generating about 0.06 per unit of risk. If you would invest 160.00 in Cairo Communication SpA on September 15, 2024 and sell it today you would earn a total of 93.00 from holding Cairo Communication SpA or generate 58.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Bank of Georgia
Performance |
| Timeline |
| Cairo Communication SpA |
| Bank of Georgia |
Cairo Communication and Bank of Georgia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Bank of Georgia
The main advantage of trading using opposite Cairo Communication and Bank of Georgia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Bank of Georgia 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 Bank of Georgia will offset losses from the drop in Bank of Georgia's long position.| Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Hyundai Motor | Cairo Communication vs. Reliance Industries Ltd |
| Bank of Georgia vs. Livermore Investments Group | Bank of Georgia vs. Spirent Communications plc | Bank of Georgia vs. mobilezone holding AG | Bank of Georgia vs. Ecclesiastical Insurance Office |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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