Correlation Between NORWEGIAN AIR and CIFI Holdings

Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and CIFI Holdings 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 NORWEGIAN AIR and CIFI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NORWEGIAN AIR SHUT and CIFI Holdings Co, you can compare the effects of market volatilities on NORWEGIAN AIR and CIFI Holdings 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 NORWEGIAN AIR with a short position of CIFI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and CIFI Holdings.

Diversification Opportunities for NORWEGIAN AIR and CIFI Holdings

0.25

Correlation Coefficient

NORWEGIAN AIR  CIFI Holdings

Modest diversification

The 3 months correlation between NORWEGIAN and CIFI is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and CIFI Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIFI Holdings and NORWEGIAN AIR 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 NORWEGIAN AIR SHUT are associated (or correlated) with CIFI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIFI Holdings has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and CIFI Holdings go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and CIFI Holdings

Assuming the 90 days trading horizon NORWEGIAN AIR is expected to generate 3.93 times less return on investment than CIFI Holdings. But when comparing it to its historical volatility, NORWEGIAN AIR SHUT is 3.59 times less risky than CIFI Holdings. It trades about 0.02 of its potential returns per unit of risk. CIFI Holdings Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11.00  in CIFI Holdings Co on October 13, 2024 and sell it today you would lose (8.75) from holding CIFI Holdings Co or give up 79.55% of portfolio value over 90 days.

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

NORWEGIAN AIR SHUT  vs.  CIFI Holdings Co

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORWEGIAN AIR SHUT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CIFI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIFI Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NORWEGIAN AIR and CIFI Holdings

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

The idea behind NORWEGIAN AIR SHUT and CIFI Holdings Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.