Correlation Between Cairo Communication and CATLIN GROUP

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

Diversification Opportunities for Cairo Communication and CATLIN GROUP

-0.55

Correlation Coefficient

Cairo Communication  CATLIN GROUP

Excellent diversification

The 3 months correlation between Cairo and CATLIN is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN GROUP 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 CATLIN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATLIN GROUP has no effect on the direction of Cairo Communication i.e., Cairo Communication and CATLIN GROUP go up and down completely randomly.

Pair Corralation between Cairo Communication and CATLIN GROUP

Assuming the 90 days trading horizon Cairo Communication SpA is expected to generate 1.79 times more return on investment than CATLIN GROUP. However, Cairo Communication is 1.79 times more volatile than CATLIN GROUP . It trades about 0.2 of its potential returns per unit of risk. CATLIN GROUP is currently generating about -0.1 per unit of risk. If you would invest  211.00  in Cairo Communication SpA on September 14, 2024 and sell it today you would earn a total of  44.00  from holding Cairo Communication SpA or generate 20.85% return on investment over 90 days.

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

Cairo Communication SpA  vs.  CATLIN GROUP

Cairo Communication SpA

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Communication SpA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Cairo Communication unveiled solid returns over the last few months and may actually be approaching a breakup point.

CATLIN GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CATLIN GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CATLIN GROUP is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cairo Communication and CATLIN GROUP

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

The idea behind Cairo Communication SpA and CATLIN 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.