Correlation Between Cairo Communication and LBG Media
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Cairo Communication and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and LBG Media.
Diversification Opportunities for Cairo Communication and LBG Media
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cairo and LBG is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Cairo Communication i.e., Cairo Communication and LBG Media go up and down completely randomly.
Pair Corralation between Cairo Communication and LBG Media
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.55 times more return on investment than LBG Media. However, Cairo Communication SpA is 1.81 times less risky than LBG Media. It trades about 0.29 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.25 per unit of risk. If you would invest 256.00 in Cairo Communication SpA on November 30, 2024 and sell it today you would earn a total of 28.00 from holding Cairo Communication SpA or generate 10.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cairo Communication SpA vs. LBG Media PLC
Performance |
Timeline |
Cairo Communication SpA |
LBG Media PLC |
Cairo Communication and LBG Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cairo Communication and LBG Media
The main advantage of trading using opposite Cairo Communication and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.Cairo Communication vs. Extra Space Storage | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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