Correlation Between Coffee Holding and Nova Minerals
Can any of the company-specific risk be diversified away by investing in both Coffee Holding and Nova Minerals 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 Coffee Holding and Nova Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Holding Co and Nova Minerals Limited, you can compare the effects of market volatilities on Coffee Holding and Nova Minerals 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 Coffee Holding with a short position of Nova Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Nova Minerals.
Diversification Opportunities for Coffee Holding and Nova Minerals
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coffee and Nova is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited and Coffee Holding 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 Coffee Holding Co are associated (or correlated) with Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of Coffee Holding i.e., Coffee Holding and Nova Minerals go up and down completely randomly.
Pair Corralation between Coffee Holding and Nova Minerals
Considering the 90-day investment horizon Coffee Holding Co is expected to generate 0.61 times more return on investment than Nova Minerals. However, Coffee Holding Co is 1.64 times less risky than Nova Minerals. It trades about 0.14 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about -0.07 per unit of risk. If you would invest 362.00 in Coffee Holding Co on November 2, 2024 and sell it today you would earn a total of 38.00 from holding Coffee Holding Co or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. Nova Minerals Limited
Performance |
| Timeline |
| Coffee Holding |
| Nova Minerals Limited |
Coffee Holding and Nova Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Nova Minerals
The main advantage of trading using opposite Coffee Holding and Nova Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding position performs unexpectedly, Nova Minerals 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 Nova Minerals will offset losses from the drop in Nova Minerals' long position.| Coffee Holding vs. Seneca Foods Corp | Coffee Holding vs. J J Snack | Coffee Holding vs. Aryzta AG PK | Coffee Holding vs. Lifeway Foods |
| Nova Minerals vs. Vishay Intertechnology | Nova Minerals vs. NH Foods Ltd | Nova Minerals vs. ASML Holding NV | Nova Minerals vs. Entegris |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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