Correlation Between Cairo Communication and ADDUS HOMECARE
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and ADDUS HOMECARE 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 ADDUS HOMECARE 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 ADDUS HOMECARE, you can compare the effects of market volatilities on Cairo Communication and ADDUS HOMECARE 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 ADDUS HOMECARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and ADDUS HOMECARE.
Diversification Opportunities for Cairo Communication and ADDUS HOMECARE
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cairo and ADDUS is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and ADDUS HOMECARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDUS HOMECARE 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 ADDUS HOMECARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADDUS HOMECARE has no effect on the direction of Cairo Communication i.e., Cairo Communication and ADDUS HOMECARE go up and down completely randomly.
Pair Corralation between Cairo Communication and ADDUS HOMECARE
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.96 times more return on investment than ADDUS HOMECARE. However, Cairo Communication SpA is 1.04 times less risky than ADDUS HOMECARE. It trades about 0.07 of its potential returns per unit of risk. ADDUS HOMECARE is currently generating about 0.03 per unit of risk. If you would invest 128.00 in Cairo Communication SpA on October 11, 2024 and sell it today you would earn a total of 109.00 from holding Cairo Communication SpA or generate 85.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. ADDUS HOMECARE
Performance |
| Timeline |
| Cairo Communication SpA |
| ADDUS HOMECARE |
Cairo Communication and ADDUS HOMECARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and ADDUS HOMECARE
The main advantage of trading using opposite Cairo Communication and ADDUS HOMECARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, ADDUS HOMECARE 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 ADDUS HOMECARE will offset losses from the drop in ADDUS HOMECARE's long position.| Cairo Communication vs. International Consolidated Airlines | Cairo Communication vs. Aegean Airlines SA | Cairo Communication vs. Ares Management Corp | Cairo Communication vs. Coor Service Management |
| ADDUS HOMECARE vs. Ribbon Communications | ADDUS HOMECARE vs. WIZZ AIR HLDGUNSPADR4 | ADDUS HOMECARE vs. Cairo Communication SpA | ADDUS HOMECARE vs. Chunghwa Telecom Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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