Correlation Between Figaro Coffee and Century Pacific
Can any of the company-specific risk be diversified away by investing in both Figaro Coffee and Century Pacific 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 Century Pacific 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 Century Pacific Food, you can compare the effects of market volatilities on Figaro Coffee and Century Pacific 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 Century Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and Century Pacific.
Diversification Opportunities for Figaro Coffee and Century Pacific
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Figaro and Century is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and Century Pacific Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Pacific Food 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 Century Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Pacific Food has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and Century Pacific go up and down completely randomly.
Pair Corralation between Figaro Coffee and Century Pacific
Assuming the 90 days trading horizon Figaro Coffee Group is expected to under-perform the Century Pacific. In addition to that, Figaro Coffee is 1.54 times more volatile than Century Pacific Food. It trades about -0.33 of its total potential returns per unit of risk. Century Pacific Food is currently generating about 0.04 per unit of volatility. If you would invest 4,110 in Century Pacific Food on August 24, 2024 and sell it today you would earn a total of 40.00 from holding Century Pacific Food or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Figaro Coffee Group vs. Century Pacific Food
Performance |
| Timeline |
| Figaro Coffee Group |
| Century Pacific Food |
Figaro Coffee and Century Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figaro Coffee and Century Pacific
The main advantage of trading using opposite Figaro Coffee and Century Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figaro Coffee position performs unexpectedly, Century Pacific 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 Century Pacific will offset losses from the drop in Century Pacific's long position.| Figaro Coffee vs. Jollibee Foods Corp | Figaro Coffee vs. Pacificonline Systems | Figaro Coffee vs. Allhome Corp | Figaro Coffee vs. LFM Properties Corp |
| Century Pacific vs. RFM Corp | Century Pacific vs. Axelum Resources Corp | Century Pacific vs. Swift 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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