Correlation Between Cairo Oils and International
Can any of the company-specific risk be diversified away by investing in both Cairo Oils and International 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 Oils and International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Oils Soap and International Co For, you can compare the effects of market volatilities on Cairo Oils and International 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 Oils with a short position of International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Oils and International.
Diversification Opportunities for Cairo Oils and International
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairo and International is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Oils Soap and International Co For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Co For and Cairo Oils 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 Oils Soap are associated (or correlated) with International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Co For has no effect on the direction of Cairo Oils i.e., Cairo Oils and International go up and down completely randomly.
Pair Corralation between Cairo Oils and International
Assuming the 90 days trading horizon Cairo Oils Soap is expected to generate 1.07 times more return on investment than International. However, Cairo Oils is 1.07 times more volatile than International Co For. It trades about -0.08 of its potential returns per unit of risk. International Co For is currently generating about -0.33 per unit of risk. If you would invest 27.00 in Cairo Oils Soap on September 20, 2024 and sell it today you would lose (1.00) from holding Cairo Oils Soap or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairo Oils Soap vs. International Co For
Performance |
| Timeline |
| Cairo Oils Soap |
| International Co For |
Cairo Oils and International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Oils and International
The main advantage of trading using opposite Cairo Oils and International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Oils position performs unexpectedly, International 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 International will offset losses from the drop in International's long position.| Cairo Oils vs. Paint Chemicals Industries | Cairo Oils vs. Reacap Financial Investments | Cairo Oils vs. Egyptians For Investment | Cairo Oils vs. Misr Oils Soap |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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