Correlation Between Ryde and CF Industries

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

By analyzing existing cross correlation between Ryde Group and CF Industries Holdings, you can compare the effects of market volatilities on Ryde and CF Industries 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 Ryde with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryde and CF Industries.

Diversification Opportunities for Ryde and CF Industries

0.67

Correlation Coefficient

Ryde  CF Industries

Poor diversification

The 3 months correlation between Ryde and CF Industries is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ryde Group and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings and Ryde 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 Ryde Group are associated (or correlated) with CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of Ryde i.e., Ryde and CF Industries go up and down completely randomly.

Pair Corralation between Ryde and CF Industries

Given the investment horizon of 90 days Ryde Group is expected to under-perform the CF Industries. In addition to that, Ryde is 2.08 times more volatile than CF Industries Holdings. It trades about -0.19 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about -0.03 per unit of volatility. If you would invest  8,351  in CF Industries Holdings on December 29, 2024 and sell it today you would lose (553.00) from holding CF Industries Holdings or give up 6.62% of portfolio value over 90 days.

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

Ryde Group  vs.  CF Industries Holdings

Ryde Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryde Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CF Industries Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days CF Industries Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CF Industries is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ryde and CF Industries

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

The idea behind Ryde Group and CF Industries Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.