Correlation Between Cairo Communication and Lendlease
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Lendlease 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 Lendlease 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 Lendlease Group, you can compare the effects of market volatilities on Cairo Communication and Lendlease 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 Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Lendlease.
Diversification Opportunities for Cairo Communication and Lendlease
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairo and Lendlease is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group 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 Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of Cairo Communication i.e., Cairo Communication and Lendlease go up and down completely randomly.
Pair Corralation between Cairo Communication and Lendlease
Assuming the 90 days trading horizon Cairo Communication is expected to generate 6.49 times less return on investment than Lendlease. But when comparing it to its historical volatility, Cairo Communication SpA is 1.01 times less risky than Lendlease. It trades about 0.03 of its potential returns per unit of risk. Lendlease Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 368.00 in Lendlease Group on October 24, 2024 and sell it today you would earn a total of 12.00 from holding Lendlease Group or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Lendlease Group
Performance |
| Timeline |
| Cairo Communication SpA |
| Lendlease Group |
Cairo Communication and Lendlease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Lendlease
The main advantage of trading using opposite Cairo Communication and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Lendlease 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 Lendlease will offset losses from the drop in Lendlease'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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