Correlation Between CAIRN HOMES and Gruppo Mutuionline

Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES and Gruppo Mutuionline 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 CAIRN HOMES and Gruppo Mutuionline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAIRN HOMES EO and Gruppo Mutuionline SpA, you can compare the effects of market volatilities on CAIRN HOMES and Gruppo Mutuionline 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 CAIRN HOMES with a short position of Gruppo Mutuionline. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and Gruppo Mutuionline.

Diversification Opportunities for CAIRN HOMES and Gruppo Mutuionline

0.51

Correlation Coefficient

CAIRN HOMES  Gruppo Mutuionline

Very weak diversification

The 3 months correlation between CAIRN and Gruppo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and Gruppo Mutuionline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo Mutuionline SpA and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with Gruppo Mutuionline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo Mutuionline SpA has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and Gruppo Mutuionline go up and down completely randomly.

Pair Corralation between CAIRN HOMES and Gruppo Mutuionline

Assuming the 90 days horizon CAIRN HOMES EO is expected to generate 1.36 times more return on investment than Gruppo Mutuionline. However, CAIRN HOMES is 1.36 times more volatile than Gruppo Mutuionline SpA. It trades about 0.08 of its potential returns per unit of risk. Gruppo Mutuionline SpA is currently generating about 0.09 per unit of risk. If you would invest  203.00  in CAIRN HOMES EO on October 10, 2024 and sell it today you would earn a total of  24.00  from holding CAIRN HOMES EO or generate 11.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

CAIRN HOMES EO  vs.  Gruppo Mutuionline SpA

CAIRN HOMES EO

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CAIRN HOMES EO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CAIRN HOMES reported solid returns over the last few months and may actually be approaching a breakup point.

Gruppo Mutuionline SpA

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with CAIRN HOMES and Gruppo Mutuionline

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

The idea behind CAIRN HOMES EO and Gruppo Mutuionline SpA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.