Correlation Between Zhibao Technology and CF Industries

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

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

Diversification Opportunities for Zhibao Technology and CF Industries

-0.57

Correlation Coefficient

Zhibao Technology  CF Industries

Excellent diversification

The 3 months correlation between Zhibao and CF Industries is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zhibao Technology Class 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 Zhibao Technology 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 Zhibao Technology Class 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 Zhibao Technology i.e., Zhibao Technology and CF Industries go up and down completely randomly.

Pair Corralation between Zhibao Technology and CF Industries

Given the investment horizon of 90 days Zhibao Technology Class is expected to under-perform the CF Industries. In addition to that, Zhibao Technology is 2.51 times more volatile than CF Industries Holdings. It trades about -0.2 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about 0.07 per unit of volatility. If you would invest  8,143  in CF Industries Holdings on October 26, 2024 and sell it today you would earn a total of  667.00  from holding CF Industries Holdings or generate 8.19% return on investment over 90 days.

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

Zhibao Technology Class  vs.  CF Industries Holdings

Zhibao Technology Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhibao Technology Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CF Industries Holdings

Risk-Adjusted Performance

5 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, CF Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zhibao Technology and CF Industries

The main advantage of trading using opposite Zhibao Technology and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhibao Technology 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 Zhibao Technology Class 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.