Correlation Between Coffee Holding and TRADEGATE
Can any of the company-specific risk be diversified away by investing in both Coffee Holding and TRADEGATE 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 TRADEGATE 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 TRADEGATE, you can compare the effects of market volatilities on Coffee Holding and TRADEGATE 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 TRADEGATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and TRADEGATE.
Diversification Opportunities for Coffee Holding and TRADEGATE
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coffee and TRADEGATE is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and TRADEGATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRADEGATE 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 TRADEGATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRADEGATE has no effect on the direction of Coffee Holding i.e., Coffee Holding and TRADEGATE go up and down completely randomly.
Pair Corralation between Coffee Holding and TRADEGATE
Assuming the 90 days horizon Coffee Holding Co is expected to generate 6.21 times more return on investment than TRADEGATE. However, Coffee Holding is 6.21 times more volatile than TRADEGATE. It trades about 0.05 of its potential returns per unit of risk. TRADEGATE is currently generating about -0.04 per unit of risk. If you would invest 197.00 in Coffee Holding Co on November 5, 2024 and sell it today you would earn a total of 181.00 from holding Coffee Holding Co or generate 91.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. TRADEGATE
Performance |
| Timeline |
| Coffee Holding |
| TRADEGATE |
Coffee Holding and TRADEGATE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and TRADEGATE
The main advantage of trading using opposite Coffee Holding and TRADEGATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding position performs unexpectedly, TRADEGATE 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 TRADEGATE will offset losses from the drop in TRADEGATE's long position.| Coffee Holding vs. ALEFARM BREWING DK 05 | Coffee Holding vs. SPORT LISBOA E | Coffee Holding vs. NTG Nordic Transport | Coffee Holding vs. WIMFARM SA EO |
| TRADEGATE vs. Check Point Software | TRADEGATE vs. Harmony Gold Mining | TRADEGATE vs. DISTRICT METALS | TRADEGATE vs. Western Copper and |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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