Correlation Between Cleopatra Hospital and Cairo Oils

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

By analyzing existing cross correlation between Cleopatra Hospital and Cairo Oils Soap, you can compare the effects of market volatilities on Cleopatra Hospital and Cairo Oils 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 Cleopatra Hospital with a short position of Cairo Oils. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleopatra Hospital and Cairo Oils.

Diversification Opportunities for Cleopatra Hospital and Cairo Oils

0.28

Correlation Coefficient

Cleopatra Hospital  Cairo Oils

Modest diversification

The 3 months correlation between Cleopatra and Cairo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cleopatra Hospital and Cairo Oils Soap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Oils Soap and Cleopatra Hospital 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 Cleopatra Hospital are associated (or correlated) with Cairo Oils. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Oils Soap has no effect on the direction of Cleopatra Hospital i.e., Cleopatra Hospital and Cairo Oils go up and down completely randomly.

Pair Corralation between Cleopatra Hospital and Cairo Oils

Assuming the 90 days trading horizon Cleopatra Hospital is expected to generate 1.02 times more return on investment than Cairo Oils. However, Cleopatra Hospital is 1.02 times more volatile than Cairo Oils Soap. It trades about 0.17 of its potential returns per unit of risk. Cairo Oils Soap is currently generating about 0.1 per unit of risk. If you would invest  630.00  in Cleopatra Hospital on September 17, 2024 and sell it today you would earn a total of  169.00  from holding Cleopatra Hospital or generate 26.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cleopatra Hospital  vs.  Cairo Oils Soap

Cleopatra Hospital

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cleopatra Hospital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cleopatra Hospital reported solid returns over the last few months and may actually be approaching a breakup point.

Cairo Oils Soap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Oils Soap are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Cairo Oils reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cleopatra Hospital and Cairo Oils

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

The idea behind Cleopatra Hospital and Cairo Oils Soap 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.