Correlation Between Crown Asia and Figaro Coffee
Can any of the company-specific risk be diversified away by investing in both Crown Asia and Figaro Coffee 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 Crown Asia and Figaro Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Asia Chemicals and Figaro Coffee Group, you can compare the effects of market volatilities on Crown Asia and Figaro Coffee 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 Crown Asia with a short position of Figaro Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and Figaro Coffee.
Diversification Opportunities for Crown Asia and Figaro Coffee
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Crown and Figaro is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Figaro Coffee Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figaro Coffee Group and Crown Asia 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 Crown Asia Chemicals are associated (or correlated) with Figaro Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Figaro Coffee Group has no effect on the direction of Crown Asia i.e., Crown Asia and Figaro Coffee go up and down completely randomly.
Pair Corralation between Crown Asia and Figaro Coffee
Assuming the 90 days trading horizon Crown Asia Chemicals is expected to generate 0.88 times more return on investment than Figaro Coffee. However, Crown Asia Chemicals is 1.14 times less risky than Figaro Coffee. It trades about -0.12 of its potential returns per unit of risk. Figaro Coffee Group is currently generating about -0.11 per unit of risk. If you would invest 190.00 in Crown Asia Chemicals on August 28, 2024 and sell it today you would lose (10.00) from holding Crown Asia Chemicals or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Asia Chemicals vs. Figaro Coffee Group
Performance |
| Timeline |
| Crown Asia Chemicals |
| Figaro Coffee Group |
Crown Asia and Figaro Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and Figaro Coffee
The main advantage of trading using opposite Crown Asia and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, Figaro Coffee 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 Figaro Coffee will offset losses from the drop in Figaro Coffee's long position.| Crown Asia vs. Century Pacific Food | Crown Asia vs. Philex Mining Corp | Crown Asia vs. Converge Information Communications | Crown Asia vs. Apex Mining Co |
| Figaro Coffee vs. SM Investments Corp | Figaro Coffee vs. Suntrust Home Developers | Figaro Coffee vs. Allhome Corp | Figaro Coffee vs. Converge Information Communications |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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