Correlation Between CF Industries and Save Foods

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

Diversification Opportunities for CF Industries and Save Foods

0.0

Correlation Coefficient

CF Industries  Save Foods

Pay attention - limited upside

The 3 months correlation between CF Industries and Save is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Save Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Save Foods 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 Save Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Save Foods has no effect on the direction of CF Industries i.e., CF Industries and Save Foods go up and down completely randomly.

Pair Corralation between CF Industries and Save Foods

If you would invest (100.00) in Save Foods on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Save Foods or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CF Industries Holdings  vs.  Save Foods

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.

Save Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Save Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Save Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CF Industries and Save Foods

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

The idea behind CF Industries Holdings and Save Foods 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.