Correlation Between Cairo Communication and Gfinity PLC
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Gfinity PLC 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 Gfinity PLC 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 Gfinity PLC, you can compare the effects of market volatilities on Cairo Communication and Gfinity PLC 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 Gfinity PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Gfinity PLC.
Diversification Opportunities for Cairo Communication and Gfinity PLC
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cairo and Gfinity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity 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 Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of Cairo Communication i.e., Cairo Communication and Gfinity PLC go up and down completely randomly.
Pair Corralation between Cairo Communication and Gfinity PLC
Assuming the 90 days trading horizon Cairo Communication is expected to generate 19.15 times less return on investment than Gfinity PLC. But when comparing it to its historical volatility, Cairo Communication SpA is 10.49 times less risky than Gfinity PLC. It trades about 0.17 of its potential returns per unit of risk. Gfinity PLC is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2.25 in Gfinity PLC on September 23, 2024 and sell it today you would earn a total of 3.50 from holding Gfinity PLC or generate 155.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Gfinity PLC
Performance |
| Timeline |
| Cairo Communication SpA |
| Gfinity PLC |
Cairo Communication and Gfinity PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Gfinity PLC
The main advantage of trading using opposite Cairo Communication and Gfinity PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Gfinity PLC 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 Gfinity PLC will offset losses from the drop in Gfinity PLC's long position.| Cairo Communication vs. Uniper SE | Cairo Communication vs. Mulberry Group PLC | Cairo Communication vs. London Security Plc | Cairo Communication vs. Triad Group PLC |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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