Correlation Between CFI Holding and CEZ As

Can any of the company-specific risk be diversified away by investing in both CFI Holding and CEZ As 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 CEZ As 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 CEZ as, you can compare the effects of market volatilities on CFI Holding and CEZ As 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 CEZ As. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and CEZ As.

Diversification Opportunities for CFI Holding and CEZ As

-0.74

Correlation Coefficient

CFI Holding  CEZ As

Pay attention - limited upside

The 3 months correlation between CFI and CEZ is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and CEZ as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ as 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 CEZ As. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ as has no effect on the direction of CFI Holding i.e., CFI Holding and CEZ As go up and down completely randomly.

Pair Corralation between CFI Holding and CEZ As

Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the CEZ As. In addition to that, CFI Holding is 2.61 times more volatile than CEZ as. It trades about -0.01 of its total potential returns per unit of risk. CEZ as is currently generating about 0.09 per unit of volatility. If you would invest  14,810  in CEZ as on September 5, 2024 and sell it today you would earn a total of  1,410  from holding CEZ as or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CFI Holding SA  vs.  CEZ as

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 relatively invariable basic indicators, CFI Holding is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CEZ as

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CEZ As may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CFI Holding and CEZ As

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

The idea behind CFI Holding SA and CEZ as 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.