Correlation Between CFI Holding and Echo Investment
Can any of the company-specific risk be diversified away by investing in both CFI Holding and Echo Investment 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 CFI Holding and Echo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CFI Holding SA and Echo Investment SA, you can compare the effects of market volatilities on CFI Holding and Echo Investment 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 CFI Holding with a short position of Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and Echo Investment.
Diversification Opportunities for CFI Holding and Echo Investment
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CFI and Echo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment SA and CFI Holding 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 CFI Holding SA are associated (or correlated) with Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of CFI Holding i.e., CFI Holding and Echo Investment go up and down completely randomly.
Pair Corralation between CFI Holding and Echo Investment
Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the Echo Investment. In addition to that, CFI Holding is 3.87 times more volatile than Echo Investment SA. It trades about -0.1 of its total potential returns per unit of risk. Echo Investment SA is currently generating about -0.04 per unit of volatility. If you would invest 458.00 in Echo Investment SA on August 27, 2024 and sell it today you would lose (7.00) from holding Echo Investment SA or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CFI Holding SA vs. Echo Investment SA
Performance |
| Timeline |
| CFI Holding SA |
| Echo Investment SA |
CFI Holding and Echo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CFI Holding and Echo Investment
The main advantage of trading using opposite CFI Holding and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, Echo Investment 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 Echo Investment will offset losses from the drop in Echo Investment's long position.| CFI Holding vs. LSI Software SA | CFI Holding vs. Play2Chill SA | CFI Holding vs. Movie Games SA | CFI Holding vs. Noble Financials SA |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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