Correlation Between CFI Holding and Vercom SA
Can any of the company-specific risk be diversified away by investing in both CFI Holding and Vercom 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 Vercom 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 Vercom SA, you can compare the effects of market volatilities on CFI Holding and Vercom 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 Vercom SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and Vercom SA.
Diversification Opportunities for CFI Holding and Vercom SA
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CFI and Vercom is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Vercom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vercom 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 Vercom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vercom SA has no effect on the direction of CFI Holding i.e., CFI Holding and Vercom SA go up and down completely randomly.
Pair Corralation between CFI Holding and Vercom SA
Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the Vercom SA. In addition to that, CFI Holding is 4.51 times more volatile than Vercom SA. It trades about -0.04 of its total potential returns per unit of risk. Vercom SA is currently generating about -0.12 per unit of volatility. If you would invest 11,900 in Vercom SA on August 30, 2024 and sell it today you would lose (450.00) from holding Vercom SA or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CFI Holding SA vs. Vercom SA
Performance |
| Timeline |
| CFI Holding SA |
| Vercom SA |
CFI Holding and Vercom SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CFI Holding and Vercom SA
The main advantage of trading using opposite CFI Holding and Vercom SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, Vercom 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 Vercom SA will offset losses from the drop in Vercom SA's 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 |
| Vercom SA vs. Banco Santander SA | Vercom SA vs. UniCredit SpA | Vercom SA vs. CEZ as | Vercom 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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