Correlation Between SMA Solar and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both SMA Solar and Cairo Communication 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 SMA Solar and Cairo Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Cairo Communication SpA, you can compare the effects of market volatilities on SMA Solar and Cairo Communication 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 SMA Solar with a short position of Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Cairo Communication.
Diversification Opportunities for SMA Solar and Cairo Communication
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SMA and Cairo is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA and SMA Solar 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 SMA Solar Technology are associated (or correlated) with Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of SMA Solar i.e., SMA Solar and Cairo Communication go up and down completely randomly.
Pair Corralation between SMA Solar and Cairo Communication
Assuming the 90 days trading horizon SMA Solar Technology is expected to generate 3.4 times more return on investment than Cairo Communication. However, SMA Solar is 3.4 times more volatile than Cairo Communication SpA. It trades about 0.12 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.07 per unit of risk. If you would invest 1,397 in SMA Solar Technology on October 24, 2024 and sell it today you would earn a total of 97.00 from holding SMA Solar Technology or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Cairo Communication SpA
Performance |
| Timeline |
| SMA Solar Technology |
| Cairo Communication SpA |
SMA Solar and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Cairo Communication
The main advantage of trading using opposite SMA Solar and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.| SMA Solar vs. Mobile Tornado Group | SMA Solar vs. Batm Advanced Communications | SMA Solar vs. Zegona Communications Plc | SMA Solar vs. Charter Communications Cl |
| Cairo Communication vs. SMA Solar Technology | Cairo Communication vs. Spotify Technology SA | Cairo Communication vs. Norwegian Air Shuttle | Cairo Communication vs. Learning Technologies Group |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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