Correlation Between Cairo Communication and Centaur Media

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

Diversification Opportunities for Cairo Communication and Centaur Media

-0.32

Correlation Coefficient

Cairo Communication  Centaur Media

Very good diversification

The 3 months correlation between Cairo and Centaur is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Cairo Communication i.e., Cairo Communication and Centaur Media go up and down completely randomly.

Pair Corralation between Cairo Communication and Centaur Media

Assuming the 90 days trading horizon Cairo Communication is expected to generate 10.24 times less return on investment than Centaur Media. But when comparing it to its historical volatility, Cairo Communication SpA is 3.51 times less risky than Centaur Media. It trades about 0.07 of its potential returns per unit of risk. Centaur Media is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,300  in Centaur Media on October 24, 2024 and sell it today you would earn a total of  300.00  from holding Centaur Media or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cairo Communication SpA  vs.  Centaur Media

Cairo Communication SpA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Communication SpA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cairo Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Centaur Media

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Centaur Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cairo Communication and Centaur Media

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

The idea behind Cairo Communication SpA and Centaur Media 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.