Correlation Between Cairo Oils and Pyramisa Hotels

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

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

Diversification Opportunities for Cairo Oils and Pyramisa Hotels

-0.85

Correlation Coefficient

Cairo Oils  Pyramisa Hotels

Pay attention - limited upside

The 3 months correlation between Cairo and Pyramisa is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Oils Soap and Pyramisa Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyramisa Hotels and Cairo Oils 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 Oils Soap are associated (or correlated) with Pyramisa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyramisa Hotels has no effect on the direction of Cairo Oils i.e., Cairo Oils and Pyramisa Hotels go up and down completely randomly.

Pair Corralation between Cairo Oils and Pyramisa Hotels

Assuming the 90 days trading horizon Cairo Oils Soap is expected to generate 2.7 times more return on investment than Pyramisa Hotels. However, Cairo Oils is 2.7 times more volatile than Pyramisa Hotels. It trades about 0.1 of its potential returns per unit of risk. Pyramisa Hotels is currently generating about -0.24 per unit of risk. If you would invest  26.00  in Cairo Oils Soap on September 17, 2024 and sell it today you would earn a total of  1.00  from holding Cairo Oils Soap or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Cairo Oils Soap  vs.  Pyramisa Hotels

Cairo Oils Soap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cairo Oils Soap are ranked lower than 9 (%) 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.

Pyramisa Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyramisa Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cairo Oils and Pyramisa Hotels

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

The idea behind Cairo Oils Soap and Pyramisa Hotels 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.