Correlation Between Coffee Holding and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Coffee Holding and Australian Agricultural 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 Coffee Holding and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Holding Co and Australian Agricultural, you can compare the effects of market volatilities on Coffee Holding and Australian Agricultural 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 Coffee Holding with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Australian Agricultural.
Diversification Opportunities for Coffee Holding and Australian Agricultural
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coffee and Australian is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and Coffee Holding 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 Coffee Holding Co are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Coffee Holding i.e., Coffee Holding and Australian Agricultural go up and down completely randomly.
Pair Corralation between Coffee Holding and Australian Agricultural
Assuming the 90 days horizon Coffee Holding Co is expected to under-perform the Australian Agricultural. In addition to that, Coffee Holding is 5.32 times more volatile than Australian Agricultural. It trades about -0.15 of its total potential returns per unit of risk. Australian Agricultural is currently generating about -0.08 per unit of volatility. If you would invest 82.00 in Australian Agricultural on October 15, 2024 and sell it today you would lose (1.00) from holding Australian Agricultural or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. Australian Agricultural
Performance |
| Timeline |
| Coffee Holding |
| Australian Agricultural |
Coffee Holding and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Australian Agricultural
The main advantage of trading using opposite Coffee Holding and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Coffee Holding vs. FIREWEED METALS P | Coffee Holding vs. GALENA MINING LTD | Coffee Holding vs. GBS Software AG | Coffee Holding vs. MCEWEN MINING INC |
| Australian Agricultural vs. T MOBILE US | Australian Agricultural vs. MARKET VECTR RETAIL | Australian Agricultural vs. GEELY AUTOMOBILE | Australian Agricultural vs. COSTCO WHOLESALE CDR |
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 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.
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