Correlation Between Figaro Coffee and Union Bank
Can any of the company-specific risk be diversified away by investing in both Figaro Coffee and Union Bank 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 Union Bank 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 Union Bank of, you can compare the effects of market volatilities on Figaro Coffee and Union Bank 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 Union Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and Union Bank.
Diversification Opportunities for Figaro Coffee and Union Bank
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Figaro and Union is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and Union Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bank 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 Union Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bank has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and Union Bank go up and down completely randomly.
Pair Corralation between Figaro Coffee and Union Bank
Assuming the 90 days trading horizon Figaro Coffee Group is expected to generate 2.32 times more return on investment than Union Bank. However, Figaro Coffee is 2.32 times more volatile than Union Bank of. It trades about -0.06 of its potential returns per unit of risk. Union Bank of is currently generating about -0.15 per unit of risk. If you would invest 85.00 in Figaro Coffee Group on September 3, 2024 and sell it today you would lose (3.00) from holding Figaro Coffee Group or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Figaro Coffee Group vs. Union Bank of
Performance |
| Timeline |
| Figaro Coffee Group |
| Union Bank |
Figaro Coffee and Union Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figaro Coffee and Union Bank
The main advantage of trading using opposite Figaro Coffee and Union Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figaro Coffee position performs unexpectedly, Union Bank 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 Union Bank will offset losses from the drop in Union Bank's long position.| Figaro Coffee vs. Metropolitan Bank Trust | Figaro Coffee vs. Manulife Financial Corp | Figaro Coffee vs. East West Banking | Figaro Coffee vs. COL Financial Group |
| Union Bank vs. Converge Information Communications | Union Bank vs. Top Frontier Investment | Union Bank vs. Crown Asia Chemicals | Union Bank vs. Figaro Coffee Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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