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 |
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 under-perform the CFI Holding. But the stock apears to be less risky and, when comparing its historical volatility, Carlson Investments SA is 1.4 times less risky than CFI Holding. The stock trades about -0.06 of its potential returns per unit of risk. The CFI Holding SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 20.00 in CFI Holding SA on September 7, 2024 and sell it today you would lose (3.00) from holding CFI Holding SA or give up 15.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Carlson Investments SA vs. CFI Holding SA
Performance |
Timeline |
Carlson Investments |
CFI Holding SA |
Carlson Investments and CFI Holding Volatility Contrast
Predicted Return Density |
Returns |
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.Carlson Investments vs. Detalion Games SA | Carlson Investments vs. Tower Investments SA | Carlson Investments vs. Movie Games SA | Carlson Investments vs. Fintech SA |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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