Correlation Between Figaro Coffee and Megawide Construction
Can any of the company-specific risk be diversified away by investing in both Figaro Coffee and Megawide Construction 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 Megawide Construction 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 Megawide Construction Corp, you can compare the effects of market volatilities on Figaro Coffee and Megawide Construction 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 Megawide Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and Megawide Construction.
Diversification Opportunities for Figaro Coffee and Megawide Construction
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Figaro and Megawide is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and Megawide Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megawide Construction 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 Megawide Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megawide Construction has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and Megawide Construction go up and down completely randomly.
Pair Corralation between Figaro Coffee and Megawide Construction
Assuming the 90 days trading horizon Figaro Coffee Group is expected to generate 2.07 times more return on investment than Megawide Construction. However, Figaro Coffee is 2.07 times more volatile than Megawide Construction Corp. It trades about 0.22 of its potential returns per unit of risk. Megawide Construction Corp is currently generating about 0.45 per unit of risk. If you would invest 76.00 in Figaro Coffee Group on September 14, 2024 and sell it today you would earn a total of 7.00 from holding Figaro Coffee Group or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 40.91% |
| Values | Daily Returns |
Figaro Coffee Group vs. Megawide Construction Corp
Performance |
| Timeline |
| Figaro Coffee Group |
| Megawide Construction |
Figaro Coffee and Megawide Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figaro Coffee and Megawide Construction
The main advantage of trading using opposite Figaro Coffee and Megawide Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figaro Coffee position performs unexpectedly, Megawide Construction 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 Megawide Construction will offset losses from the drop in Megawide Construction's long position.| Figaro Coffee vs. Metropolitan Bank Trust | Figaro Coffee vs. COL Financial Group | Figaro Coffee vs. Top Frontier Investment | Figaro Coffee vs. Semirara Mining Corp |
| Megawide Construction vs. Araneta Properties | Megawide Construction vs. GT Capital Holdings | Megawide Construction vs. Allhome Corp | Megawide Construction vs. Jollibee Foods 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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