Correlation Between Cairo Communication and Electrica
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Electrica 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 Electrica 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 Electrica SA, you can compare the effects of market volatilities on Cairo Communication and Electrica 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 Electrica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Electrica.
Diversification Opportunities for Cairo Communication and Electrica
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairo and Electrica is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Electrica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrica SA 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 Electrica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrica SA has no effect on the direction of Cairo Communication i.e., Cairo Communication and Electrica go up and down completely randomly.
Pair Corralation between Cairo Communication and Electrica
Assuming the 90 days trading horizon Cairo Communication is expected to generate 1.28 times less return on investment than Electrica. In addition to that, Cairo Communication is 1.16 times more volatile than Electrica SA. It trades about 0.08 of its total potential returns per unit of risk. Electrica SA is currently generating about 0.11 per unit of volatility. If you would invest 577.00 in Electrica SA on September 5, 2024 and sell it today you would earn a total of 723.00 from holding Electrica SA or generate 125.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Electrica SA
Performance |
| Timeline |
| Cairo Communication SpA |
| Electrica SA |
Cairo Communication and Electrica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Electrica
The main advantage of trading using opposite Cairo Communication and Electrica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Electrica 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 Electrica will offset losses from the drop in Electrica's long position.| Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Hyundai Motor | Cairo Communication vs. Toyota Motor Corp |
| Electrica vs. Cairo Communication SpA | Electrica vs. Jupiter Fund Management | Electrica vs. Liontrust Asset Management | Electrica vs. Verizon Communications |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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