Correlation Between Cairo Communication and G-III Apparel

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

Diversification Opportunities for Cairo Communication and G-III Apparel

0.74

Correlation Coefficient

Cairo Communication  G-III Apparel

Poor diversification

The 3 months correlation between Cairo and G-III is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G-III Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Cairo Communication i.e., Cairo Communication and G-III Apparel go up and down completely randomly.

Pair Corralation between Cairo Communication and G-III Apparel

Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 0.96 times more return on investment than G-III Apparel. However, Cairo Communication SpA is 1.04 times less risky than G-III Apparel. It trades about 0.08 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.04 per unit of risk. If you would invest  213.00  in Cairo Communication SpA on October 23, 2024 and sell it today you would earn a total of  23.00  from holding Cairo Communication SpA or generate 10.8% 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.  G III Apparel Group

Cairo Communication SpA

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Communication SpA are ranked lower than 6 (%) 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.

G III Apparel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, G-III Apparel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cairo Communication and G-III Apparel

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

The idea behind Cairo Communication SpA and G III Apparel Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.