Correlation Between Figaro Coffee and Crown Asia
Can any of the company-specific risk be diversified away by investing in both Figaro Coffee and Crown Asia 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 Crown Asia 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 Crown Asia Chemicals, you can compare the effects of market volatilities on Figaro Coffee and Crown Asia 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 Crown Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and Crown Asia.
Diversification Opportunities for Figaro Coffee and Crown Asia
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Figaro and Crown is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and Crown Asia Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Asia Chemicals 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 Crown Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Asia Chemicals has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and Crown Asia go up and down completely randomly.
Pair Corralation between Figaro Coffee and Crown Asia
Assuming the 90 days trading horizon Figaro Coffee Group is expected to under-perform the Crown Asia. But the stock apears to be less risky and, when comparing its historical volatility, Figaro Coffee Group is 1.27 times less risky than Crown Asia. The stock trades about -0.22 of its potential returns per unit of risk. The Crown Asia Chemicals is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 176.00 in Crown Asia Chemicals on November 4, 2024 and sell it today you would lose (10.00) from holding Crown Asia Chemicals or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Figaro Coffee Group vs. Crown Asia Chemicals
Performance |
| Timeline |
| Figaro Coffee Group |
| Crown Asia Chemicals |
Figaro Coffee and Crown Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figaro Coffee and Crown Asia
The main advantage of trading using opposite Figaro Coffee and Crown Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figaro Coffee position performs unexpectedly, Crown Asia 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 Crown Asia will offset losses from the drop in Crown Asia's long position.| Figaro Coffee vs. SM Investments Corp | Figaro Coffee vs. Converge Information Communications | Figaro Coffee vs. Transpacific Broadband Group | Figaro Coffee vs. Prime Media Holdings |
| Crown Asia vs. Bank of the | Crown Asia vs. National Reinsurance | Crown Asia vs. Transpacific Broadband Group | Crown Asia vs. Converge Information Communications |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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