Correlation Between Naked Wines and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both Naked Wines 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 Naked Wines and Cairo Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naked Wines plc and Cairo Communication SpA, you can compare the effects of market volatilities on Naked Wines 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 Naked Wines with a short position of Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Cairo Communication.
Diversification Opportunities for Naked Wines and Cairo Communication
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Naked and Cairo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines 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 Naked Wines 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 Naked Wines 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 Naked Wines i.e., Naked Wines and Cairo Communication go up and down completely randomly.
Pair Corralation between Naked Wines and Cairo Communication
Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Cairo Communication. In addition to that, Naked Wines is 2.05 times more volatile than Cairo Communication SpA. It trades about -0.02 of its total potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.07 per unit of volatility. If you would invest 130.00 in Cairo Communication SpA on August 28, 2024 and sell it today you would earn a total of 99.00 from holding Cairo Communication SpA or generate 76.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naked Wines plc vs. Cairo Communication SpA
Performance |
| Timeline |
| Naked Wines plc |
| Cairo Communication SpA |
Naked Wines and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and Cairo Communication
The main advantage of trading using opposite Naked Wines and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines 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.| Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Samsung Electronics Co | Naked Wines vs. Hyundai Motor | Naked Wines vs. Toyota Motor Corp |
| Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Samsung Electronics Co | Cairo Communication vs. Hyundai Motor | Cairo Communication vs. Toyota Motor Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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