Correlation Between CFI Holding and Erbud SA
Can any of the company-specific risk be diversified away by investing in both CFI Holding and Erbud SA 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 Erbud SA 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 Erbud SA, you can compare the effects of market volatilities on CFI Holding and Erbud SA 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 Erbud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and Erbud SA.
Diversification Opportunities for CFI Holding and Erbud SA
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CFI and Erbud is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Erbud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erbud 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 Erbud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erbud SA has no effect on the direction of CFI Holding i.e., CFI Holding and Erbud SA go up and down completely randomly.
Pair Corralation between CFI Holding and Erbud SA
Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the Erbud SA. In addition to that, CFI Holding is 1.5 times more volatile than Erbud SA. It trades about -0.02 of its total potential returns per unit of risk. Erbud SA is currently generating about 0.01 per unit of volatility. If you would invest 3,278 in Erbud SA on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Erbud SA or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CFI Holding SA vs. Erbud SA
Performance |
| Timeline |
| CFI Holding SA |
| Erbud SA |
CFI Holding and Erbud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CFI Holding and Erbud SA
The main advantage of trading using opposite CFI Holding and Erbud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, Erbud SA 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 Erbud SA will offset losses from the drop in Erbud SA's long position.| CFI Holding vs. CI Games SA | CFI Holding vs. SOFTWARE MANSION SPOLKA | CFI Holding vs. BNP Paribas Bank | CFI Holding vs. Varsav Game Studios |
| Erbud SA vs. Banco Santander SA | Erbud SA vs. UniCredit SpA | Erbud SA vs. CEZ as | Erbud SA vs. Polski Koncern Naftowy |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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