Correlation Between CFI Holding and Beta MWIG40TR

Can any of the company-specific risk be diversified away by investing in both CFI Holding and Beta MWIG40TR 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 Beta MWIG40TR 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 Beta mWIG40TR Portfelowy, you can compare the effects of market volatilities on CFI Holding and Beta MWIG40TR 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 Beta MWIG40TR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and Beta MWIG40TR.

Diversification Opportunities for CFI Holding and Beta MWIG40TR

0.61

Correlation Coefficient

CFI Holding  Beta MWIG40TR

Poor diversification

The 3 months correlation between CFI and Beta is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Beta mWIG40TR Portfelowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beta mWIG40TR Portfelowy 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 Beta MWIG40TR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beta mWIG40TR Portfelowy has no effect on the direction of CFI Holding i.e., CFI Holding and Beta MWIG40TR go up and down completely randomly.

Pair Corralation between CFI Holding and Beta MWIG40TR

Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the Beta MWIG40TR. In addition to that, CFI Holding is 4.8 times more volatile than Beta mWIG40TR Portfelowy. It trades about -0.03 of its total potential returns per unit of risk. Beta mWIG40TR Portfelowy is currently generating about -0.09 per unit of volatility. If you would invest  9,785  in Beta mWIG40TR Portfelowy on August 30, 2024 and sell it today you would lose (498.00) from holding Beta mWIG40TR Portfelowy or give up 5.09% of portfolio value over 90 days.

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

CFI Holding SA  vs.  Beta mWIG40TR Portfelowy

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Beta mWIG40TR Portfelowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beta mWIG40TR Portfelowy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Beta MWIG40TR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CFI Holding and Beta MWIG40TR

The main advantage of trading using opposite CFI Holding and Beta MWIG40TR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, Beta MWIG40TR 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 Beta MWIG40TR will offset losses from the drop in Beta MWIG40TR's long position.

The idea behind CFI Holding SA and Beta mWIG40TR Portfelowy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.