Correlation Between Cairo Communication and ImmuPharma PLC

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

Diversification Opportunities for Cairo Communication and ImmuPharma PLC

0.39

Correlation Coefficient

Cairo Communication  ImmuPharma PLC

Weak diversification

The 3 months correlation between Cairo and ImmuPharma is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and ImmuPharma PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImmuPharma PLC 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 ImmuPharma PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImmuPharma PLC has no effect on the direction of Cairo Communication i.e., Cairo Communication and ImmuPharma PLC go up and down completely randomly.

Pair Corralation between Cairo Communication and ImmuPharma PLC

Assuming the 90 days trading horizon Cairo Communication is expected to generate 12.92 times less return on investment than ImmuPharma PLC. But when comparing it to its historical volatility, Cairo Communication SpA is 17.28 times less risky than ImmuPharma PLC. It trades about 0.19 of its potential returns per unit of risk. ImmuPharma PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  109.00  in ImmuPharma PLC on December 2, 2024 and sell it today you would earn a total of  246.00  from holding ImmuPharma PLC or generate 225.69% return on investment over 90 days.

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

Cairo Communication SpA  vs.  ImmuPharma PLC

Cairo Communication SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Communication SpA are ranked lower than 14 (%) 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.

ImmuPharma PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ImmuPharma PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ImmuPharma PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cairo Communication and ImmuPharma PLC

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

The idea behind Cairo Communication SpA and ImmuPharma PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.