Correlation Between CFI Holding and 4Mass SA

Can any of the company-specific risk be diversified away by investing in both CFI Holding and 4Mass SA 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 4Mass SA 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 4Mass SA, you can compare the effects of market volatilities on CFI Holding and 4Mass SA 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 4Mass SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and 4Mass SA.

Diversification Opportunities for CFI Holding and 4Mass SA

0.63

Correlation Coefficient

CFI Holding  4Mass SA

Poor diversification

The 3 months correlation between CFI and 4Mass is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and 4Mass SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4Mass SA 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 4Mass SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4Mass SA has no effect on the direction of CFI Holding i.e., CFI Holding and 4Mass SA go up and down completely randomly.

Pair Corralation between CFI Holding and 4Mass SA

Assuming the 90 days trading horizon CFI Holding SA is expected to generate 2.84 times more return on investment than 4Mass SA. However, CFI Holding is 2.84 times more volatile than 4Mass SA. It trades about 0.04 of its potential returns per unit of risk. 4Mass SA is currently generating about 0.02 per unit of risk. If you would invest  16.00  in CFI Holding SA on December 21, 2024 and sell it today you would earn a total of  1.00  from holding CFI Holding SA or generate 6.25% return on investment over 90 days.

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

CFI Holding SA  vs.  4Mass SA

CFI Holding SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CFI Holding SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CFI Holding reported solid returns over the last few months and may actually be approaching a breakup point.

4Mass SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 4Mass SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, 4Mass SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CFI Holding and 4Mass SA

The main advantage of trading using opposite CFI Holding and 4Mass SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, 4Mass SA 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 4Mass SA will offset losses from the drop in 4Mass SA's long position.

The idea behind CFI Holding SA and 4Mass SA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.