Correlation Between Poste Italiane and CIFI Holdings

Can any of the company-specific risk be diversified away by investing in both Poste Italiane and CIFI Holdings 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 Poste Italiane and CIFI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Poste Italiane SpA and CIFI Holdings Co, you can compare the effects of market volatilities on Poste Italiane and CIFI Holdings 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 Poste Italiane with a short position of CIFI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poste Italiane and CIFI Holdings.

Diversification Opportunities for Poste Italiane and CIFI Holdings

-0.34

Correlation Coefficient

Poste Italiane  CIFI Holdings

Very good diversification

The 3 months correlation between Poste and CIFI is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Poste Italiane SpA and CIFI Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIFI Holdings and Poste Italiane 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 Poste Italiane SpA are associated (or correlated) with CIFI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIFI Holdings has no effect on the direction of Poste Italiane i.e., Poste Italiane and CIFI Holdings go up and down completely randomly.

Pair Corralation between Poste Italiane and CIFI Holdings

Assuming the 90 days horizon Poste Italiane SpA is expected to generate 0.2 times more return on investment than CIFI Holdings. However, Poste Italiane SpA is 4.96 times less risky than CIFI Holdings. It trades about 0.15 of its potential returns per unit of risk. CIFI Holdings Co is currently generating about 0.0 per unit of risk. If you would invest  1,304  in Poste Italiane SpA on September 24, 2024 and sell it today you would earn a total of  39.00  from holding Poste Italiane SpA or generate 2.99% return on investment over 90 days.

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

Poste Italiane SpA  vs.  CIFI Holdings Co

Poste Italiane SpA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Poste Italiane SpA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Poste Italiane may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CIFI Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CIFI Holdings Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CIFI Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Poste Italiane and CIFI Holdings

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

The idea behind Poste Italiane SpA and CIFI Holdings Co 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.