Correlation Between CFI Holding and Detalion Games

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

Diversification Opportunities for CFI Holding and Detalion Games

-0.11

Correlation Coefficient

CFI Holding  Detalion Games

Good diversification

The 3 months correlation between CFI and Detalion is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Detalion Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Detalion Games 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 Detalion Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Detalion Games SA has no effect on the direction of CFI Holding i.e., CFI Holding and Detalion Games go up and down completely randomly.

Pair Corralation between CFI Holding and Detalion Games

Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the Detalion Games. But the stock apears to be less risky and, when comparing its historical volatility, CFI Holding SA is 1.41 times less risky than Detalion Games. The stock trades about 0.0 of its potential returns per unit of risk. The Detalion Games SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Detalion Games SA on December 30, 2024 and sell it today you would earn a total of  19.00  from holding Detalion Games SA or generate 20.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.21%
Values	Daily Returns

CFI Holding SA  vs.  Detalion Games SA

CFI Holding SA

Risk-Adjusted Performance

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 relatively invariable basic indicators, CFI Holding is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Detalion Games SA

Risk-Adjusted Performance

OK

Over the last 90 days Detalion Games SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Detalion Games reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CFI Holding and Detalion Games

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

The idea behind CFI Holding SA and Detalion Games 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.