Correlation Between Cairo Communication and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and ITV 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 ITV 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 ITV PLC, you can compare the effects of market volatilities on Cairo Communication and ITV 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 ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and ITV PLC.
Diversification Opportunities for Cairo Communication and ITV PLC
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cairo and ITV is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and ITV PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV 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 ITV PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV PLC has no effect on the direction of Cairo Communication i.e., Cairo Communication and ITV PLC go up and down completely randomly.
Pair Corralation between Cairo Communication and ITV PLC
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.96 times more return on investment than ITV PLC. However, Cairo Communication SpA is 1.04 times less risky than ITV PLC. It trades about 0.09 of its potential returns per unit of risk. ITV PLC is currently generating about 0.02 per unit of risk. If you would invest 126.00 in Cairo Communication SpA on September 14, 2024 and sell it today you would earn a total of 129.00 from holding Cairo Communication SpA or generate 102.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cairo Communication SpA vs. ITV PLC
Performance |
| Timeline |
| Cairo Communication SpA |
| ITV PLC |
Cairo Communication and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and ITV PLC
The main advantage of trading using opposite Cairo Communication and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, ITV 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 ITV PLC will offset losses from the drop in ITV PLC's long position.| Cairo Communication vs. Herald Investment Trust | Cairo Communication vs. The Mercantile Investment | Cairo Communication vs. Beeks Trading | Cairo Communication vs. Oakley Capital Investments |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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