Correlation Between Cairo Communication and Helium One

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

Diversification Opportunities for Cairo Communication and Helium One

0.65

Correlation Coefficient

Cairo Communication  Helium One

Poor diversification

The 3 months correlation between Cairo and Helium is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Helium One Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helium One Global 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 Helium One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helium One Global has no effect on the direction of Cairo Communication i.e., Cairo Communication and Helium One go up and down completely randomly.

Pair Corralation between Cairo Communication and Helium One

Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.33 times more return on investment than Helium One. However, Cairo Communication SpA is 3.04 times less risky than Helium One. It trades about 0.21 of its potential returns per unit of risk. Helium One Global is currently generating about 0.05 per unit of risk. If you would invest  242.00  in Cairo Communication SpA on December 28, 2024 and sell it today you would earn a total of  44.00  from holding Cairo Communication SpA or generate 18.18% return on investment over 90 days.

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

Cairo Communication SpA  vs.  Helium One Global

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 16 (%) 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.

Helium One Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helium One Global are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Helium One exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cairo Communication and Helium One

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

The idea behind Cairo Communication SpA and Helium One Global 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.