Correlation Between CF Industries and N2OFF

Can any of the company-specific risk be diversified away by investing in both CF Industries and N2OFF 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 N2OFF 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 N2OFF Inc, you can compare the effects of market volatilities on CF Industries and N2OFF 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 N2OFF. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and N2OFF.

Diversification Opportunities for CF Industries and N2OFF

0.66

Correlation Coefficient

CF Industries  N2OFF

Poor diversification

The 3 months correlation between CF Industries and N2OFF is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and N2OFF Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N2OFF Inc 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 N2OFF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N2OFF Inc has no effect on the direction of CF Industries i.e., CF Industries and N2OFF go up and down completely randomly.

Pair Corralation between CF Industries and N2OFF

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to under-perform the N2OFF. But the stock apears to be less risky and, when comparing its historical volatility, CF Industries Holdings is 19.45 times less risky than N2OFF. The stock trades about -0.04 of its potential returns per unit of risk. The N2OFF Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  28.00  in N2OFF Inc on December 30, 2024 and sell it today you would lose (3.00) from holding N2OFF Inc or give up 10.71% of portfolio value over 90 days.

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

CF Industries Holdings  vs.  N2OFF Inc

CF Industries Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days CF Industries Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

N2OFF Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in N2OFF Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, N2OFF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CF Industries and N2OFF

The main advantage of trading using opposite CF Industries and N2OFF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, N2OFF 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 N2OFF will offset losses from the drop in N2OFF's long position.

The idea behind CF Industries Holdings and N2OFF Inc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.