Correlation Between Cairo Communication and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and HSBC Holdings 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 HSBC Holdings 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 HSBC Holdings PLC, you can compare the effects of market volatilities on Cairo Communication and HSBC Holdings 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 HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and HSBC Holdings.
Diversification Opportunities for Cairo Communication and HSBC Holdings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairo and HSBC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and HSBC Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings 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 HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings PLC has no effect on the direction of Cairo Communication i.e., Cairo Communication and HSBC Holdings go up and down completely randomly.
Pair Corralation between Cairo Communication and HSBC Holdings
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 1.4 times more return on investment than HSBC Holdings. However, Cairo Communication is 1.4 times more volatile than HSBC Holdings PLC. It trades about 0.08 of its potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.09 per unit of risk. If you would invest 131.00 in Cairo Communication SpA on September 23, 2024 and sell it today you would earn a total of 116.00 from holding Cairo Communication SpA or generate 88.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.4% |
Values | Daily Returns |
Cairo Communication SpA vs. HSBC Holdings PLC
Performance |
Timeline |
Cairo Communication SpA |
HSBC Holdings PLC |
Cairo Communication and HSBC Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cairo Communication and HSBC Holdings
The main advantage of trading using opposite Cairo Communication and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' 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 |
HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Hyundai Motor | HSBC Holdings vs. Toyota Motor Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Global Correlations Find global opportunities by holding instruments from different markets |