Correlation Between Cairo Communication and Caledonia Investments
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments, you can compare the effects of market volatilities on Cairo Communication and Caledonia Investments 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 Caledonia Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Caledonia Investments.
Diversification Opportunities for Cairo Communication and Caledonia Investments
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairo and Caledonia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Caledonia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Investments 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 Caledonia Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Investments has no effect on the direction of Cairo Communication i.e., Cairo Communication and Caledonia Investments go up and down completely randomly.
Pair Corralation between Cairo Communication and Caledonia Investments
If you would invest 145.00 in Cairo Communication SpA on October 25, 2024 and sell it today you would earn a total of 102.00 from holding Cairo Communication SpA or generate 70.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.2% |
| Values | Daily Returns |
Cairo Communication SpA vs. Caledonia Investments
Performance |
| Timeline |
| Cairo Communication SpA |
| Caledonia Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Cairo Communication and Caledonia Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Caledonia Investments
The main advantage of trading using opposite Cairo Communication and Caledonia Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Caledonia Investments 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 Caledonia Investments will offset losses from the drop in Caledonia Investments' long position.| Cairo Communication vs. Pfeiffer Vacuum Technology | Cairo Communication vs. Pets at Home | Cairo Communication vs. Fortune Brands Home | Cairo Communication vs. Polar Capital Technology |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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