Correlation Between Cairo For and Contact Financial

Can any of the company-specific risk be diversified away by investing in both Cairo For and Contact Financial 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 For and Contact Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cairo For Investment and Contact Financial Holding, you can compare the effects of market volatilities on Cairo For and Contact Financial 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 For with a short position of Contact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo For and Contact Financial.

Diversification Opportunities for Cairo For and Contact Financial

-0.23

Correlation Coefficient

Cairo For  Contact Financial

Very good diversification

The 3 months correlation between Cairo and Contact is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cairo For Investment and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding and Cairo For 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 For Investment are associated (or correlated) with Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of Cairo For i.e., Cairo For and Contact Financial go up and down completely randomly.

Pair Corralation between Cairo For and Contact Financial

Assuming the 90 days trading horizon Cairo For Investment is expected to under-perform the Contact Financial. But the stock apears to be less risky and, when comparing its historical volatility, Cairo For Investment is 1.06 times less risky than Contact Financial. The stock trades about -0.02 of its potential returns per unit of risk. The Contact Financial Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  437.00  in Contact Financial Holding on December 30, 2024 and sell it today you would lose (3.00) from holding Contact Financial Holding or give up 0.69% of portfolio value over 90 days.

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

Cairo For Investment  vs.  Contact Financial Holding

Cairo For Investment

Risk-Adjusted Performance

Very Weak

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

Contact Financial Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Contact Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Contact Financial 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 For and Contact Financial

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

The idea behind Cairo For Investment and Contact Financial Holding 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.