Correlation Between Cairo Communication and Solid State

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

Diversification Opportunities for Cairo Communication and Solid State

0.58

Correlation Coefficient

Cairo Communication  Solid State

Very weak diversification

The 3 months correlation between Cairo and Solid is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Solid State Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid State 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 Solid State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid State Plc has no effect on the direction of Cairo Communication i.e., Cairo Communication and Solid State go up and down completely randomly.

Pair Corralation between Cairo Communication and Solid State

Assuming the 90 days trading horizon Cairo Communication is expected to generate 2.57 times less return on investment than Solid State. But when comparing it to its historical volatility, Cairo Communication SpA is 3.14 times less risky than Solid State. It trades about 0.22 of its potential returns per unit of risk. Solid State Plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  12,681  in Solid State Plc on December 22, 2024 and sell it today you would earn a total of  6,319  from holding Solid State Plc or generate 49.83% return on investment over 90 days.

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

Cairo Communication SpA  vs.  Solid State Plc

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.

Solid State Plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solid State Plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Solid State unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cairo Communication and Solid State

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

The idea behind Cairo Communication SpA and Solid State 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.