Correlation Between Coffee Holding and Inchcape Plc
Can any of the company-specific risk be diversified away by investing in both Coffee Holding and Inchcape Plc 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 Inchcape Plc 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 Inchcape plc, you can compare the effects of market volatilities on Coffee Holding and Inchcape Plc 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 Inchcape Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Inchcape Plc.
Diversification Opportunities for Coffee Holding and Inchcape Plc
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Coffee and Inchcape is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Inchcape plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inchcape plc 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 Inchcape Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inchcape plc has no effect on the direction of Coffee Holding i.e., Coffee Holding and Inchcape Plc go up and down completely randomly.
Pair Corralation between Coffee Holding and Inchcape Plc
Assuming the 90 days horizon Coffee Holding Co is expected to generate 1.13 times more return on investment than Inchcape Plc. However, Coffee Holding is 1.13 times more volatile than Inchcape plc. It trades about 0.02 of its potential returns per unit of risk. Inchcape plc is currently generating about -0.16 per unit of risk. If you would invest 376.00 in Coffee Holding Co on November 6, 2024 and sell it today you would earn a total of 2.00 from holding Coffee Holding Co or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. Inchcape plc
Performance |
| Timeline |
| Coffee Holding |
| Inchcape plc |
Coffee Holding and Inchcape Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Inchcape Plc
The main advantage of trading using opposite Coffee Holding and Inchcape Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding position performs unexpectedly, Inchcape Plc 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 Inchcape Plc will offset losses from the drop in Inchcape Plc's long position.| Coffee Holding vs. Nestl SA | Coffee Holding vs. Kraft Heinz Co | Coffee Holding vs. General Mills | Coffee Holding vs. General Mills |
| Inchcape Plc vs. Copart Inc | Inchcape Plc vs. Lithia Motors | Inchcape Plc vs. Superior Plus Corp | Inchcape Plc vs. Origin Agritech |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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