Correlation Between Temple Bar and Cairo Communication

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

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

Diversification Opportunities for Temple Bar and Cairo Communication

-0.23

Correlation Coefficient

Temple Bar  Cairo Communication

Very good diversification

The 3 months correlation between Temple and Cairo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Temple Bar Investment 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 Temple Bar 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 Temple Bar Investment 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 Temple Bar i.e., Temple Bar and Cairo Communication go up and down completely randomly.

Pair Corralation between Temple Bar and Cairo Communication

Assuming the 90 days trading horizon Temple Bar Investment is expected to generate 0.34 times more return on investment than Cairo Communication. However, Temple Bar Investment is 2.97 times less risky than Cairo Communication. It trades about 0.42 of its potential returns per unit of risk. Cairo Communication SpA is currently generating about -0.02 per unit of risk. If you would invest  28,901  in Temple Bar Investment on April 25, 2025 and sell it today you would earn a total of  4,749  from holding Temple Bar Investment or generate 16.43% return on investment over 90 days.

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

Temple Bar Investment  vs.  Cairo Communication SpA

Temple Bar Investment

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Temple Bar Investment are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Temple Bar unveiled 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Temple Bar and Cairo Communication

The main advantage of trading using opposite Temple Bar and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Temple Bar 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 Temple Bar Investment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.