Correlation Between CF Industries and Airship AI

Can any of the company-specific risk be diversified away by investing in both CF Industries and Airship AI 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 Airship AI 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 Airship AI Holdings, you can compare the effects of market volatilities on CF Industries and Airship AI 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 Airship AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Airship AI.

Diversification Opportunities for CF Industries and Airship AI

0.3

Correlation Coefficient

CF Industries  Airship AI

Weak diversification

The 3 months correlation between CF Industries and Airship is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Airship AI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airship AI Holdings 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 Airship AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airship AI Holdings has no effect on the direction of CF Industries i.e., CF Industries and Airship AI go up and down completely randomly.

Pair Corralation between CF Industries and Airship AI

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to under-perform the Airship AI. But the stock apears to be less risky and, when comparing its historical volatility, CF Industries Holdings is 5.32 times less risky than Airship AI. The stock trades about -0.17 of its potential returns per unit of risk. The Airship AI Holdings is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  244.00  in Airship AI Holdings on September 22, 2024 and sell it today you would earn a total of  193.00  from holding Airship AI Holdings or generate 79.1% return on investment over 90 days.

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

CF Industries Holdings  vs.  Airship AI Holdings

CF Industries Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, CF Industries is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Airship AI Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airship AI Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Airship AI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CF Industries and Airship AI

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

The idea behind CF Industries Holdings and Airship AI Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..