Correlation Between Cairo Communication and HCA Healthcare

Can any of the company-specific risk be diversified away by investing in both Cairo Communication and HCA Healthcare 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 HCA Healthcare 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 HCA Healthcare, you can compare the effects of market volatilities on Cairo Communication and HCA Healthcare 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 HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and HCA Healthcare.

Diversification Opportunities for Cairo Communication and HCA Healthcare

0.02

Correlation Coefficient

Cairo Communication  HCA Healthcare

Significant diversification

The 3 months correlation between Cairo and HCA is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare 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 HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Cairo Communication i.e., Cairo Communication and HCA Healthcare go up and down completely randomly.

Pair Corralation between Cairo Communication and HCA Healthcare

Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.96 times more return on investment than HCA Healthcare. However, Cairo Communication SpA is 1.05 times less risky than HCA Healthcare. It trades about 0.33 of its potential returns per unit of risk. HCA Healthcare is currently generating about -0.02 per unit of risk. If you would invest  253.00  in Cairo Communication SpA on November 27, 2024 and sell it today you would earn a total of  31.00  from holding Cairo Communication SpA or generate 12.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Cairo Communication SpA  vs.  HCA Healthcare

Cairo Communication SpA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Communication SpA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cairo Communication unveiled solid returns over the last few months and may actually be approaching a breakup point.

HCA Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days HCA Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HCA Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cairo Communication and HCA Healthcare

The main advantage of trading using opposite Cairo Communication and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.

The idea behind Cairo Communication SpA and HCA Healthcare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.