Correlation Between Halfords Group and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both Halfords Group and Cairo Communication 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 Halfords Group and Cairo Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halfords Group PLC and Cairo Communication SpA, you can compare the effects of market volatilities on Halfords Group and Cairo Communication 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 Halfords Group with a short position of Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halfords Group and Cairo Communication.
Diversification Opportunities for Halfords Group and Cairo Communication
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Halfords and Cairo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Halfords Group PLC and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA and Halfords Group 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 Halfords Group PLC are associated (or correlated) with Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of Halfords Group i.e., Halfords Group and Cairo Communication go up and down completely randomly.
Pair Corralation between Halfords Group and Cairo Communication
Assuming the 90 days trading horizon Halfords Group PLC is expected to under-perform the Cairo Communication. But the stock apears to be less risky and, when comparing its historical volatility, Halfords Group PLC is 1.48 times less risky than Cairo Communication. The stock trades about -0.44 of its potential returns per unit of risk. The Cairo Communication SpA is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Cairo Communication SpA on October 9, 2024 and sell it today you would lose (6.00) from holding Cairo Communication SpA or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halfords Group PLC vs. Cairo Communication SpA
Performance |
| Timeline |
| Halfords Group PLC |
| Cairo Communication SpA |
Halfords Group and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halfords Group and Cairo Communication
The main advantage of trading using opposite Halfords Group and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halfords Group position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.| Halfords Group vs. Ameriprise Financial | Halfords Group vs. Axway Software SA | Halfords Group vs. Tetragon Financial Group | Halfords Group vs. Bankers Investment Trust |
| Cairo Communication vs. Europa Metals | Cairo Communication vs. Wheaton Precious Metals | Cairo Communication vs. Tavistock Investments Plc | Cairo Communication vs. Jacquet Metal Service |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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