Correlation Between Figaro Coffee and STI Education
Can any of the company-specific risk be diversified away by investing in both Figaro Coffee and STI Education 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 STI Education 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 STI Education Systems, you can compare the effects of market volatilities on Figaro Coffee and STI Education 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 STI Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and STI Education.
Diversification Opportunities for Figaro Coffee and STI Education
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Figaro and STI is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and STI Education Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STI Education Systems 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 STI Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STI Education Systems has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and STI Education go up and down completely randomly.
Pair Corralation between Figaro Coffee and STI Education
Assuming the 90 days trading horizon Figaro Coffee Group is expected to under-perform the STI Education. But the stock apears to be less risky and, when comparing its historical volatility, Figaro Coffee Group is 1.0 times less risky than STI Education. The stock trades about -0.19 of its potential returns per unit of risk. The STI Education Systems is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 116.00 in STI Education Systems on August 25, 2024 and sell it today you would earn a total of 12.00 from holding STI Education Systems or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Figaro Coffee Group vs. STI Education Systems
Performance |
| Timeline |
| Figaro Coffee Group |
| STI Education Systems |
Figaro Coffee and STI Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figaro Coffee and STI Education
The main advantage of trading using opposite Figaro Coffee and STI Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figaro Coffee position performs unexpectedly, STI Education 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 STI Education will offset losses from the drop in STI Education's long position.| Figaro Coffee vs. Transpacific Broadband Group | Figaro Coffee vs. Atlas Consolidated Mining | Figaro Coffee vs. Crown Asia Chemicals | Figaro Coffee vs. Converge Information Communications |
| STI Education vs. Allhome Corp | STI Education vs. Altus Property Ventures | STI Education vs. AgriNurture | STI Education vs. Wilcon Depot |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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