Correlation Between GS Chain and Cairo Communication

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Can any of the company-specific risk be diversified away by investing in both GS Chain 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 GS Chain and Cairo Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GS Chain PLC and Cairo Communication SpA, you can compare the effects of market volatilities on GS Chain 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 GS Chain with a short position of Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Chain and Cairo Communication.

Diversification Opportunities for GS Chain and Cairo Communication

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between GSC and Cairo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GS Chain PLC 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 GS Chain 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 GS Chain PLC 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 GS Chain i.e., GS Chain and Cairo Communication go up and down completely randomly.

Pair Corralation between GS Chain and Cairo Communication

Assuming the 90 days trading horizon GS Chain PLC is expected to generate 73.91 times more return on investment than Cairo Communication. However, GS Chain is 73.91 times more volatile than Cairo Communication SpA. It trades about 0.11 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  65.00  in GS Chain PLC on April 24, 2025 and sell it today you would lose (25.00) from holding GS Chain PLC or give up 38.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GS Chain PLC  vs.  Cairo Communication SpA

 Performance 
       Timeline  
GS Chain PLC 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in GS Chain PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GS Chain exhibited solid returns over the last few months and may actually be approaching a breakup point.
Cairo Communication SpA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

GS Chain and Cairo Communication Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GS Chain and Cairo Communication

The main advantage of trading using opposite GS Chain and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Chain 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 GS Chain PLC 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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