Correlation Between Marwyn Value and Cairo Communication

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

By analyzing existing cross correlation between Marwyn Value Investors and Cairo Communication SpA, you can compare the effects of market volatilities on Marwyn Value and Cairo Communication 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 Marwyn Value with a short position of Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marwyn Value and Cairo Communication.

Diversification Opportunities for Marwyn Value and Cairo Communication

0.01

Correlation Coefficient

Marwyn Value  Cairo Communication

Significant diversification

The 3 months correlation between Marwyn and Cairo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Marwyn Value Investors and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA and Marwyn Value 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 Marwyn Value Investors are associated (or correlated) with Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of Marwyn Value i.e., Marwyn Value and Cairo Communication go up and down completely randomly.

Pair Corralation between Marwyn Value and Cairo Communication

Assuming the 90 days trading horizon Marwyn Value Investors is expected to generate 0.88 times more return on investment than Cairo Communication. However, Marwyn Value Investors is 1.13 times less risky than Cairo Communication. It trades about 0.61 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about -0.03 per unit of risk. If you would invest  8,600  in Marwyn Value Investors on October 11, 2024 and sell it today you would earn a total of  1,450  from holding Marwyn Value Investors or generate 16.86% return on investment over 90 days.

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

Marwyn Value Investors  vs.  Cairo Communication SpA

Marwyn Value Investors

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marwyn Value Investors are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Marwyn Value exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cairo Communication SpA

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Communication SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cairo Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Marwyn Value and Cairo Communication

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

The idea behind Marwyn Value Investors and Cairo Communication SpA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.