Correlation Between United Utilities and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both United Utilities 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 United Utilities and Cairo Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Utilities Group and Cairo Communication SpA, you can compare the effects of market volatilities on United Utilities 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 United Utilities with a short position of Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Utilities and Cairo Communication.
Diversification Opportunities for United Utilities and Cairo Communication
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Cairo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding United Utilities Group 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 United Utilities 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 United Utilities Group 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 United Utilities i.e., United Utilities and Cairo Communication go up and down completely randomly.
Pair Corralation between United Utilities and Cairo Communication
Assuming the 90 days trading horizon United Utilities Group is expected to under-perform the Cairo Communication. In addition to that, United Utilities is 1.06 times more volatile than Cairo Communication SpA. It trades about -0.2 of its total potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.13 per unit of volatility. If you would invest 236.00 in Cairo Communication SpA on October 30, 2024 and sell it today you would earn a total of 17.00 from holding Cairo Communication SpA or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Utilities Group vs. Cairo Communication SpA
Performance |
| Timeline |
| United Utilities |
| Cairo Communication SpA |
United Utilities and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Utilities and Cairo Communication
The main advantage of trading using opposite United Utilities and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Utilities 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.| United Utilities vs. Catalyst Media Group | United Utilities vs. CATLIN GROUP | United Utilities vs. Tamburi Investment Partners | United Utilities vs. Magnora ASA |
| Cairo Communication vs. Centaur Media | Cairo Communication vs. Ubisoft Entertainment | Cairo Communication vs. Aeorema Communications Plc | Cairo Communication vs. Batm Advanced Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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