Correlation Between Carlson Investments and CFI Holding

Can any of the company-specific risk be diversified away by investing in both Carlson Investments and CFI Holding 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 Carlson Investments and CFI Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carlson Investments SA and CFI Holding SA, you can compare the effects of market volatilities on Carlson Investments and CFI Holding 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 Carlson Investments with a short position of CFI Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlson Investments and CFI Holding.

Diversification Opportunities for Carlson Investments and CFI Holding

0.46

Correlation Coefficient

Carlson Investments  CFI Holding

Very weak diversification

The 3 months correlation between Carlson and CFI is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Carlson Investments SA and CFI Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFI Holding SA and Carlson Investments 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 Carlson Investments SA are associated (or correlated) with CFI Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFI Holding SA has no effect on the direction of Carlson Investments i.e., Carlson Investments and CFI Holding go up and down completely randomly.

Pair Corralation between Carlson Investments and CFI Holding

Assuming the 90 days trading horizon Carlson Investments SA is expected to generate 1.19 times more return on investment than CFI Holding. However, Carlson Investments is 1.19 times more volatile than CFI Holding SA. It trades about -0.04 of its potential returns per unit of risk. CFI Holding SA is currently generating about -0.06 per unit of risk. If you would invest  573.00  in Carlson Investments SA on September 9, 2024 and sell it today you would lose (153.00) from holding Carlson Investments SA or give up 26.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Carlson Investments SA  vs.  CFI Holding SA

Carlson Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlson Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

CFI Holding SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CFI Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Carlson Investments and CFI Holding

The main advantage of trading using opposite Carlson Investments and CFI Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlson Investments position performs unexpectedly, CFI Holding 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 CFI Holding will offset losses from the drop in CFI Holding's long position.

The idea behind Carlson Investments SA and CFI Holding SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.