Correlation Between Cairo Communication and Pentair Plc

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

Diversification Opportunities for Cairo Communication and Pentair Plc

CairoPentairDiversified AwayCairoPentairDiversified Away100%
0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cairo and Pentair is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair 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 Pentair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair plc has no effect on the direction of Cairo Communication i.e., Cairo Communication and Pentair Plc go up and down completely randomly.

Pair Corralation between Cairo Communication and Pentair Plc

Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 1.72 times more return on investment than Pentair Plc. However, Cairo Communication is 1.72 times more volatile than Pentair plc. It trades about 0.11 of its potential returns per unit of risk. Pentair plc is currently generating about 0.09 per unit of risk. If you would invest  215.00  in Cairo Communication SpA on October 30, 2024 and sell it today you would earn a total of  32.00  from holding Cairo Communication SpA or generate 14.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.33%
ValuesDaily Returns

Cairo Communication SpA  vs.  Pentair plc

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-5051015
JavaScript chart by amCharts 3.21.15CI1A PNT
       Timeline  
Cairo Communication SpA 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Communication SpA are ranked lower than 8 (%) 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan22.12.22.32.42.5
Pentair plc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pentair Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan9092949698100102104

Cairo Communication and Pentair Plc Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.59-5.68-3.78-1.870.03171.913.885.857.829.8 0.050.100.150.20
JavaScript chart by amCharts 3.21.15CI1A PNT
       Returns  

Pair Trading with Cairo Communication and Pentair Plc

The main advantage of trading using opposite Cairo Communication and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, Pentair 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 Pentair Plc will offset losses from the drop in Pentair Plc's long position.
The idea behind Cairo Communication SpA and Pentair 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.
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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