Correlation Between CAIRN HOMES and RYANAIR HLDGS

Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES and RYANAIR HLDGS 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 CAIRN HOMES and RYANAIR HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAIRN HOMES EO and RYANAIR HLDGS ADR, you can compare the effects of market volatilities on CAIRN HOMES and RYANAIR HLDGS 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 CAIRN HOMES with a short position of RYANAIR HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and RYANAIR HLDGS.

Diversification Opportunities for CAIRN HOMES and RYANAIR HLDGS

0.96

Correlation Coefficient

CAIRN HOMES  RYANAIR HLDGS

Almost no diversification

The 3 months correlation between CAIRN and RYANAIR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and RYANAIR HLDGS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYANAIR HLDGS ADR and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with RYANAIR HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYANAIR HLDGS ADR has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and RYANAIR HLDGS go up and down completely randomly.

Pair Corralation between CAIRN HOMES and RYANAIR HLDGS

Assuming the 90 days horizon CAIRN HOMES is expected to generate 1.33 times less return on investment than RYANAIR HLDGS. But when comparing it to its historical volatility, CAIRN HOMES EO is 3.28 times less risky than RYANAIR HLDGS. It trades about 0.08 of its potential returns per unit of risk. RYANAIR HLDGS ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,808  in RYANAIR HLDGS ADR on April 1, 2025 and sell it today you would earn a total of  952.00  from holding RYANAIR HLDGS ADR or generate 25.0% return on investment over 90 days.

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

CAIRN HOMES EO  vs.  RYANAIR HLDGS ADR

CAIRN HOMES EO

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CAIRN HOMES EO are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CAIRN HOMES reported solid returns over the last few months and may actually be approaching a breakup point.

RYANAIR HLDGS ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RYANAIR HLDGS ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RYANAIR HLDGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAIRN HOMES and RYANAIR HLDGS

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

The idea behind CAIRN HOMES EO and RYANAIR HLDGS ADR 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.