Correlation Between Coffee Holding and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both Coffee Holding and CosmoSteel Holdings 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 CosmoSteel Holdings 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 CosmoSteel Holdings Limited, you can compare the effects of market volatilities on Coffee Holding and CosmoSteel Holdings 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 CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and CosmoSteel Holdings.
Diversification Opportunities for Coffee Holding and CosmoSteel Holdings
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coffee and CosmoSteel is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings 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 CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of Coffee Holding i.e., Coffee Holding and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between Coffee Holding and CosmoSteel Holdings
Assuming the 90 days horizon Coffee Holding Co is expected to generate 1.96 times more return on investment than CosmoSteel Holdings. However, Coffee Holding is 1.96 times more volatile than CosmoSteel Holdings Limited. It trades about 0.04 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.0 per unit of risk. If you would invest 202.00 in Coffee Holding Co on September 26, 2024 and sell it today you would earn a total of 146.00 from holding Coffee Holding Co or generate 72.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| Coffee Holding |
| CosmoSteel Holdings |
Coffee Holding and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and CosmoSteel Holdings
The main advantage of trading using opposite Coffee Holding and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding position performs unexpectedly, CosmoSteel Holdings 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 CosmoSteel Holdings will offset losses from the drop in CosmoSteel Holdings' long position.| Coffee Holding vs. Mowi ASA | Coffee Holding vs. LEROY SEAFOOD GRUNSPADR | Coffee Holding vs. Lery Seafood Group | Coffee Holding vs. Nisshin Seifun Group |
| CosmoSteel Holdings vs. Coffee Holding Co | CosmoSteel Holdings vs. IMPERIAL TOBACCO | CosmoSteel Holdings vs. BJs Restaurants | CosmoSteel Holdings vs. Lifeway Foods |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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