Correlation Between Cairo Communication and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and Meiko Electronics 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 Meiko Electronics 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 Meiko Electronics Co, you can compare the effects of market volatilities on Cairo Communication and Meiko Electronics 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 Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and Meiko Electronics.
Diversification Opportunities for Cairo Communication and Meiko Electronics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairo and Meiko is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of Cairo Communication i.e., Cairo Communication and Meiko Electronics go up and down completely randomly.
Pair Corralation between Cairo Communication and Meiko Electronics
Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 1.41 times more return on investment than Meiko Electronics. However, Cairo Communication is 1.41 times more volatile than Meiko Electronics Co. It trades about 0.13 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about 0.04 per unit of risk. If you would invest 211.00 in Cairo Communication SpA on October 19, 2024 and sell it today you would earn a total of 25.00 from holding Cairo Communication SpA or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Communication SpA vs. Meiko Electronics Co
Performance |
| Timeline |
| Cairo Communication SpA |
| Meiko Electronics |
Cairo Communication and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and Meiko Electronics
The main advantage of trading using opposite Cairo Communication and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Meiko Electronics 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.| Cairo Communication vs. ZINC MEDIA GR | Cairo Communication vs. Live Nation Entertainment | Cairo Communication vs. SQUIRREL MEDIA SA | Cairo Communication vs. PKSHA TECHNOLOGY INC |
| Meiko Electronics vs. Singapore Telecommunications Limited | Meiko Electronics vs. Cairo Communication SpA | Meiko Electronics vs. COVIVIO HOTELS INH | Meiko Electronics vs. Choice Hotels International |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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