Correlation Between Compagnie and Cairo Communication

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

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

Diversification Opportunities for Compagnie and Cairo Communication

0.32

Correlation Coefficient

Compagnie  Cairo Communication

Weak diversification

The 3 months correlation between Compagnie and Cairo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain 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 Compagnie 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 Compagnie de Saint Gobain 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 Compagnie i.e., Compagnie and Cairo Communication go up and down completely randomly.

Pair Corralation between Compagnie and Cairo Communication

Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 1.65 times more return on investment than Cairo Communication. However, Compagnie is 1.65 times more volatile than Cairo Communication SpA. It trades about 0.15 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about -0.01 per unit of risk. If you would invest  7,943  in Compagnie de Saint Gobain on April 22, 2025 and sell it today you would earn a total of  2,212  from holding Compagnie de Saint Gobain or generate 27.85% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Cairo Communication SpA

Compagnie de Saint

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Compagnie exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cairo Communication SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cairo Communication SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cairo Communication is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compagnie and Cairo Communication

The main advantage of trading using opposite Compagnie and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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 Compagnie de Saint Gobain 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.