Correlation Between CFI Holding and Adiuvo Investment

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

Diversification Opportunities for CFI Holding and Adiuvo Investment

-0.36

Correlation Coefficient

CFI Holding  Adiuvo Investment

Very good diversification

The 3 months correlation between CFI and Adiuvo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Adiuvo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adiuvo Investment 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 Adiuvo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adiuvo Investment has no effect on the direction of CFI Holding i.e., CFI Holding and Adiuvo Investment go up and down completely randomly.

Pair Corralation between CFI Holding and Adiuvo Investment

Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the Adiuvo Investment. But the stock apears to be less risky and, when comparing its historical volatility, CFI Holding SA is 1.96 times less risky than Adiuvo Investment. The stock trades about -0.05 of its potential returns per unit of risk. The Adiuvo Investment SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Adiuvo Investment SA on September 2, 2024 and sell it today you would earn a total of  1.00  from holding Adiuvo Investment SA or generate 2.86% return on investment over 90 days.

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

CFI Holding SA  vs.  Adiuvo Investment SA

CFI Holding SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CFI Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Adiuvo Investment

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with CFI Holding and Adiuvo Investment

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

The idea behind CFI Holding SA and Adiuvo Investment 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.