Correlation Between Cairo Communication and Continental

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

Diversification Opportunities for Cairo Communication and Continental

0.42

Correlation Coefficient

Cairo Communication  Continental

Very weak diversification

The 3 months correlation between Cairo and Continental is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Cairo Communication i.e., Cairo Communication and Continental go up and down completely randomly.

Pair Corralation between Cairo Communication and Continental

Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 1.3 times more return on investment than Continental. However, Cairo Communication is 1.3 times more volatile than Camden Property Trust. It trades about 0.18 of its potential returns per unit of risk. Camden Property Trust is currently generating about 0.01 per unit of risk. If you would invest  235.00  in Cairo Communication SpA on December 25, 2024 and sell it today you would earn a total of  47.00  from holding Cairo Communication SpA or generate 20.0% 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.  Camden Property Trust

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 fragile basic indicators, Cairo Communication unveiled solid returns over the last few months and may actually be approaching a breakup point.

Camden Property Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Camden Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Continental is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cairo Communication and Continental

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

The idea behind Cairo Communication SpA and Camden Property Trust 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.