Correlation Between CFI Holding and MW Trade
Can any of the company-specific risk be diversified away by investing in both CFI Holding and MW Trade 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 MW Trade 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 MW Trade SA, you can compare the effects of market volatilities on CFI Holding and MW Trade 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 MW Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and MW Trade.
Diversification Opportunities for CFI Holding and MW Trade
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CFI and MWT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and MW Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MW Trade 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 MW Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MW Trade SA has no effect on the direction of CFI Holding i.e., CFI Holding and MW Trade go up and down completely randomly.
Pair Corralation between CFI Holding and MW Trade
Assuming the 90 days trading horizon CFI Holding SA is expected to generate 1.45 times more return on investment than MW Trade. However, CFI Holding is 1.45 times more volatile than MW Trade SA. It trades about -0.03 of its potential returns per unit of risk. MW Trade SA is currently generating about -0.12 per unit of risk. If you would invest 22.00 in CFI Holding SA on August 27, 2024 and sell it today you would lose (5.00) from holding CFI Holding SA or give up 22.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CFI Holding SA vs. MW Trade SA
Performance |
| Timeline |
| CFI Holding SA |
| MW Trade SA |
CFI Holding and MW Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CFI Holding and MW Trade
The main advantage of trading using opposite CFI Holding and MW Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, MW Trade 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 MW Trade will offset losses from the drop in MW Trade'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 |
| MW Trade vs. Asseco Business Solutions | MW Trade vs. Detalion Games SA | MW Trade vs. Asseco South Eastern | MW Trade vs. CFI Holding SA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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