Correlation Between ECC Games and CFI Holding

Can any of the company-specific risk be diversified away by investing in both ECC Games and CFI Holding 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 ECC Games and CFI Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ECC Games SA and CFI Holding SA, you can compare the effects of market volatilities on ECC Games and CFI Holding 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 ECC Games with a short position of CFI Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECC Games and CFI Holding.

Diversification Opportunities for ECC Games and CFI Holding

0.55

Correlation Coefficient

ECC Games  CFI Holding

Very weak diversification

The 3 months correlation between ECC and CFI is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ECC Games SA and CFI Holding SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFI Holding SA and ECC Games 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 ECC Games SA are associated (or correlated) with CFI Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFI Holding SA has no effect on the direction of ECC Games i.e., ECC Games and CFI Holding go up and down completely randomly.

Pair Corralation between ECC Games and CFI Holding

Assuming the 90 days trading horizon ECC Games SA is expected to under-perform the CFI Holding. In addition to that, ECC Games is 1.43 times more volatile than CFI Holding SA. It trades about -0.07 of its total potential returns per unit of risk. CFI Holding SA is currently generating about -0.05 per unit of volatility. If you would invest  21.00  in CFI Holding SA on September 2, 2024 and sell it today you would lose (4.00) from holding CFI Holding SA or give up 19.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	82.81%
Values	Daily Returns

ECC Games SA  vs.  CFI Holding SA

ECC Games SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECC Games 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.

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.

Pair Trading with ECC Games and CFI Holding

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

The idea behind ECC Games SA and CFI Holding 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.