Correlation Between G III and Cairo Communication

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

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

Diversification Opportunities for G III and Cairo Communication

0.72

Correlation Coefficient

G III  Cairo Communication

Poor diversification

The 3 months correlation between GI4 and Cairo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group 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 G III 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 G III Apparel Group 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 G III i.e., G III and Cairo Communication go up and down completely randomly.

Pair Corralation between G III and Cairo Communication

Assuming the 90 days horizon G III Apparel Group is expected to generate 1.04 times more return on investment than Cairo Communication. However, G III is 1.04 times more volatile than Cairo Communication SpA. It trades about -0.03 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  2,220  in G III Apparel Group on May 6, 2025 and sell it today you would lose (180.00) from holding G III Apparel Group or give up 8.11% of portfolio value over 90 days.

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

G III Apparel Group  vs.  Cairo Communication SpA

G III Apparel

Risk-Adjusted Performance

Very Weak

Over the last 90 days G III Apparel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, G III is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 G III and Cairo Communication

The main advantage of trading using opposite G III and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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 G III Apparel Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.