Correlation Between SoftBank Group and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and Cairo Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and Cairo Communication SpA, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Cairo Communication.
Diversification Opportunities for SoftBank Group and Cairo Communication
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SoftBank and Cairo is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp 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 SoftBank Group 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 SoftBank Group Corp 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 SoftBank Group i.e., SoftBank Group and Cairo Communication go up and down completely randomly.
Pair Corralation between SoftBank Group and Cairo Communication
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 3.1 times more return on investment than Cairo Communication. However, SoftBank Group is 3.1 times more volatile than Cairo Communication SpA. It trades about 0.29 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about -0.02 per unit of risk. If you would invest 918,500 in SoftBank Group Corp on October 25, 2024 and sell it today you would earn a total of 94,000 from holding SoftBank Group Corp or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 57.89% |
| Values | Daily Returns |
SoftBank Group Corp vs. Cairo Communication SpA
Performance |
| Timeline |
| SoftBank Group Corp |
| Cairo Communication SpA |
SoftBank Group and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Cairo Communication
The main advantage of trading using opposite SoftBank Group and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.| SoftBank Group vs. PPHE Hotel Group | SoftBank Group vs. Spotify Technology SA | SoftBank Group vs. British American Tobacco | SoftBank Group vs. DXC Technology Co |
| Cairo Communication vs. Toyota Motor Corp | Cairo Communication vs. SoftBank Group Corp | Cairo Communication vs. OTP Bank Nyrt | Cairo Communication vs. ONEOK Inc |
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 Stocks Directory module to find actively traded stocks across global markets.
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