Correlation Between Coffee Holding and X FAB
Can any of the company-specific risk be diversified away by investing in both Coffee Holding and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Coffee Holding and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and X FAB.
Diversification Opportunities for Coffee Holding and X FAB
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coffee and XFB is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Coffee Holding i.e., Coffee Holding and X FAB go up and down completely randomly.
Pair Corralation between Coffee Holding and X FAB
Assuming the 90 days horizon Coffee Holding Co is expected to under-perform the X FAB. In addition to that, Coffee Holding is 1.71 times more volatile than X FAB Silicon Foundries. It trades about -0.03 of its total potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.0 per unit of volatility. If you would invest 498.00 in X FAB Silicon Foundries on October 29, 2024 and sell it today you would lose (2.00) from holding X FAB Silicon Foundries or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Coffee Holding Co vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Coffee Holding |
| X FAB Silicon |
Coffee Holding and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and X FAB
The main advantage of trading using opposite Coffee Holding and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Coffee Holding vs. Games Workshop Group | Coffee Holding vs. Cars Inc | Coffee Holding vs. GigaMedia | Coffee Holding vs. Scientific Games |
| X FAB vs. Reinsurance Group of | X FAB vs. GURU ORGANIC ENERGY | X FAB vs. PATTIES FOODS | X FAB vs. Cal Maine 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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