Correlation Between CF Industries and Nubia Brand

Can any of the company-specific risk be diversified away by investing in both CF Industries and Nubia Brand 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 CF Industries and Nubia Brand into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CF Industries Holdings and Nubia Brand International, you can compare the effects of market volatilities on CF Industries and Nubia Brand 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 CF Industries with a short position of Nubia Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Nubia Brand.

Diversification Opportunities for CF Industries and Nubia Brand

-0.01

Correlation Coefficient

CF Industries  Nubia Brand

Good diversification

The 3 months correlation between CF Industries and Nubia is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Nubia Brand International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nubia Brand International and CF Industries 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 CF Industries Holdings are associated (or correlated) with Nubia Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nubia Brand International has no effect on the direction of CF Industries i.e., CF Industries and Nubia Brand go up and down completely randomly.

Pair Corralation between CF Industries and Nubia Brand

If you would invest  7,927  in CF Industries Holdings on September 16, 2024 and sell it today you would earn a total of  1,023  from holding CF Industries Holdings or generate 12.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

CF Industries Holdings  vs.  Nubia Brand International

CF Industries Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, CF Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nubia Brand International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nubia Brand International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Nubia Brand is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CF Industries and Nubia Brand

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

The idea behind CF Industries Holdings and Nubia Brand International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.