Correlation Between CFI Holding and Saule Technologies

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

Diversification Opportunities for CFI Holding and Saule Technologies

0.75

Correlation Coefficient

CFI Holding  Saule Technologies

Poor diversification

The 3 months correlation between CFI and Saule is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Saule Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saule Technologies 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 Saule Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saule Technologies has no effect on the direction of CFI Holding i.e., CFI Holding and Saule Technologies go up and down completely randomly.

Pair Corralation between CFI Holding and Saule Technologies

Assuming the 90 days trading horizon CFI Holding SA is expected to generate 1.68 times more return on investment than Saule Technologies. However, CFI Holding is 1.68 times more volatile than Saule Technologies SA. It trades about 0.25 of its potential returns per unit of risk. Saule Technologies SA is currently generating about -0.06 per unit of risk. If you would invest  16.00  in CFI Holding SA on October 7, 2024 and sell it today you would earn a total of  4.00  from holding CFI Holding SA or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

CFI Holding SA  vs.  Saule Technologies SA

CFI Holding SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CFI Holding SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CFI Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Saule Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saule Technologies 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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CFI Holding and Saule Technologies

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

The idea behind CFI Holding SA and Saule Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.