Correlation Between First Capital and CF Financial

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

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

Diversification Opportunities for First Capital and CF Financial

-0.28

Correlation Coefficient

First Capital  CF Financial

Very good diversification

The 3 months correlation between First and CFFI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and CF Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Financial and First Capital 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 First Capital are associated (or correlated) with CF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Financial has no effect on the direction of First Capital i.e., First Capital and CF Financial go up and down completely randomly.

Pair Corralation between First Capital and CF Financial

Given the investment horizon of 90 days First Capital is expected to under-perform the CF Financial. In addition to that, First Capital is 1.35 times more volatile than CF Financial. It trades about -0.12 of its total potential returns per unit of risk. CF Financial is currently generating about 0.09 per unit of volatility. If you would invest  6,441  in CF Financial on May 28, 2025 and sell it today you would earn a total of  699.00  from holding CF Financial or generate 10.85% return on investment over 90 days.

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

First Capital  vs.  CF Financial

First Capital

Risk-Adjusted Performance

Weakest

Over the last 90 days First Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

CF Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in CF Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, CF Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First Capital and CF Financial

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

The idea behind First Capital and CF Financial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.