Correlation Between CFI Holding and Tower Investments
Can any of the company-specific risk be diversified away by investing in both CFI Holding and Tower Investments 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 Tower Investments 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 Tower Investments SA, you can compare the effects of market volatilities on CFI Holding and Tower Investments 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 Tower Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and Tower Investments.
Diversification Opportunities for CFI Holding and Tower Investments
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CFI and Tower is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Tower Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Investments 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 Tower Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Investments has no effect on the direction of CFI Holding i.e., CFI Holding and Tower Investments go up and down completely randomly.
Pair Corralation between CFI Holding and Tower Investments
Assuming the 90 days trading horizon CFI Holding SA is expected to generate 0.45 times more return on investment than Tower Investments. However, CFI Holding SA is 2.24 times less risky than Tower Investments. It trades about 0.0 of its potential returns per unit of risk. Tower Investments SA is currently generating about -0.03 per unit of risk. If you would invest 22.00 in CFI Holding SA on August 29, 2024 and sell it today you would lose (3.00) from holding CFI Holding SA or give up 13.64% 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. Tower Investments SA
Performance |
| Timeline |
| CFI Holding SA |
| Tower Investments |
CFI Holding and Tower Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CFI Holding and Tower Investments
The main advantage of trading using opposite CFI Holding and Tower Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, Tower Investments 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 Tower Investments will offset losses from the drop in Tower Investments' long position.| CFI Holding vs. Tower Investments SA | CFI Holding vs. Centrum Finansowe Banku | CFI Holding vs. Alior Bank SA | CFI Holding vs. Santander Bank Polska |
| Tower Investments vs. Dom Development SA | Tower Investments vs. Asseco Business Solutions | Tower Investments vs. Detalion Games SA | Tower Investments 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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