Correlation Between Cairo Communication and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Hormel Foods 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 Hormel Foods 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 Hormel Foods, you can compare the effects of market volatilities on Cairo Communication and Hormel Foods 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 Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Hormel Foods.
Diversification Opportunities for Cairo Communication and Hormel Foods
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairo and Hormel is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods 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 Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of Cairo Communication i.e., Cairo Communication and Hormel Foods go up and down completely randomly.
Pair Corralation between Cairo Communication and Hormel Foods
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 2.47 times more return on investment than Hormel Foods. However, Cairo Communication is 2.47 times more volatile than Hormel Foods. It trades about -0.05 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.37 per unit of risk. If you would invest 245.00 in Cairo Communication SpA on October 12, 2024 and sell it today you would lose (8.00) from holding Cairo Communication SpA or give up 3.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Cairo Communication SpA vs. Hormel Foods
Performance |
| Timeline |
| Cairo Communication SpA |
| Hormel Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Cairo Communication and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Hormel Foods
The main advantage of trading using opposite Cairo Communication and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Hormel Foods 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.| Cairo Communication vs. CyberArk Software | Cairo Communication vs. MAGIC SOFTWARE ENTR | Cairo Communication vs. Corporate Travel Management | Cairo Communication vs. AIR PRODCHEMICALS |
| Hormel Foods vs. Materialise NV | Hormel Foods vs. Cleanaway Waste Management | Hormel Foods vs. THRACE PLASTICS | Hormel Foods vs. OFFICE DEPOT |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |