Correlation Between Figaro Coffee and First Abacus
Can any of the company-specific risk be diversified away by investing in both Figaro Coffee and First Abacus 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 First Abacus 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 First Abacus Financial, you can compare the effects of market volatilities on Figaro Coffee and First Abacus 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 First Abacus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and First Abacus.
Diversification Opportunities for Figaro Coffee and First Abacus
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Figaro and First is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and First Abacus Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Abacus Financial 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 First Abacus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Abacus Financial has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and First Abacus go up and down completely randomly.
Pair Corralation between Figaro Coffee and First Abacus
Assuming the 90 days trading horizon Figaro Coffee is expected to generate 2.74 times less return on investment than First Abacus. But when comparing it to its historical volatility, Figaro Coffee Group is 1.98 times less risky than First Abacus. It trades about 0.07 of its potential returns per unit of risk. First Abacus Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 65.00 in First Abacus Financial on August 28, 2024 and sell it today you would earn a total of 4.00 from holding First Abacus Financial or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 26.98% |
| Values | Daily Returns |
Figaro Coffee Group vs. First Abacus Financial
Performance |
| Timeline |
| Figaro Coffee Group |
| First Abacus Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Figaro Coffee and First Abacus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figaro Coffee and First Abacus
The main advantage of trading using opposite Figaro Coffee and First Abacus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figaro Coffee position performs unexpectedly, First Abacus 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 First Abacus will offset losses from the drop in First Abacus' long position.| Figaro Coffee vs. SM Investments Corp | Figaro Coffee vs. Suntrust Home Developers | Figaro Coffee vs. Allhome Corp | Figaro Coffee vs. Converge Information Communications |
| First Abacus vs. Century Pacific Food | First Abacus vs. Alliance Select Foods | First Abacus vs. Figaro Coffee Group | First Abacus vs. Philex Mining Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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