Correlation Between Cairo Communication and Granite Construction
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Granite Construction 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 Granite Construction 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 Granite Construction, you can compare the effects of market volatilities on Cairo Communication and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Granite Construction.
Diversification Opportunities for Cairo Communication and Granite Construction
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cairo and Granite is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of Cairo Communication i.e., Cairo Communication and Granite Construction go up and down completely randomly.
Pair Corralation between Cairo Communication and Granite Construction
Assuming the 90 days trading horizon Cairo Communication SpA is expected to under-perform the Granite Construction. In addition to that, Cairo Communication is 1.98 times more volatile than Granite Construction. It trades about -0.25 of its total potential returns per unit of risk. Granite Construction is currently generating about -0.22 per unit of volatility. If you would invest 8,886 in Granite Construction on October 16, 2024 and sell it today you would lose (336.00) from holding Granite Construction or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Granite Construction
Performance |
| Timeline |
| Cairo Communication SpA |
| Granite Construction |
Cairo Communication and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Granite Construction
The main advantage of trading using opposite Cairo Communication and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| Cairo Communication vs. Apple Inc | Cairo Communication vs. Apple Inc | Cairo Communication vs. Apple Inc | Cairo Communication vs. Apple Inc |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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