Correlation Between Figaro Coffee and Berjaya Philippines
Can any of the company-specific risk be diversified away by investing in both Figaro Coffee and Berjaya Philippines 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 Figaro Coffee and Berjaya Philippines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Figaro Coffee Group and Berjaya Philippines, you can compare the effects of market volatilities on Figaro Coffee and Berjaya Philippines 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 Figaro Coffee with a short position of Berjaya Philippines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and Berjaya Philippines.
Diversification Opportunities for Figaro Coffee and Berjaya Philippines
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Figaro and Berjaya is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and Berjaya Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berjaya Philippines and Figaro Coffee 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 Figaro Coffee Group are associated (or correlated) with Berjaya Philippines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berjaya Philippines has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and Berjaya Philippines go up and down completely randomly.
Pair Corralation between Figaro Coffee and Berjaya Philippines
Assuming the 90 days trading horizon Figaro Coffee Group is expected to generate 0.24 times more return on investment than Berjaya Philippines. However, Figaro Coffee Group is 4.17 times less risky than Berjaya Philippines. It trades about -0.02 of its potential returns per unit of risk. Berjaya Philippines is currently generating about -0.26 per unit of risk. If you would invest 85.00 in Figaro Coffee Group on October 25, 2024 and sell it today you would lose (1.00) from holding Figaro Coffee Group or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 58.82% |
| Values | Daily Returns |
Figaro Coffee Group vs. Berjaya Philippines
Performance |
| Timeline |
| Figaro Coffee Group |
| Berjaya Philippines |
Figaro Coffee and Berjaya Philippines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figaro Coffee and Berjaya Philippines
The main advantage of trading using opposite Figaro Coffee and Berjaya Philippines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figaro Coffee position performs unexpectedly, Berjaya Philippines 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 Berjaya Philippines will offset losses from the drop in Berjaya Philippines' long position.| Figaro Coffee vs. Philex Mining Corp | Figaro Coffee vs. Manila Mining Corp | Figaro Coffee vs. Atlas Consolidated Mining | Figaro Coffee vs. Asia United Bank |
| Berjaya Philippines vs. East West Banking | Berjaya Philippines vs. Asia United Bank | Berjaya Philippines vs. Jollibee Foods Corp | Berjaya Philippines vs. Crown Asia Chemicals |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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