Correlation Between Lepanto Consolidated and Figaro Coffee
Can any of the company-specific risk be diversified away by investing in both Lepanto Consolidated and Figaro Coffee 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 Lepanto Consolidated and Figaro Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lepanto Consolidated Mining and Figaro Coffee Group, you can compare the effects of market volatilities on Lepanto Consolidated and Figaro Coffee 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 Lepanto Consolidated with a short position of Figaro Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lepanto Consolidated and Figaro Coffee.
Diversification Opportunities for Lepanto Consolidated and Figaro Coffee
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lepanto and Figaro is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lepanto Consolidated Mining and Figaro Coffee Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figaro Coffee Group and Lepanto Consolidated 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 Lepanto Consolidated Mining are associated (or correlated) with Figaro Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Figaro Coffee Group has no effect on the direction of Lepanto Consolidated i.e., Lepanto Consolidated and Figaro Coffee go up and down completely randomly.
Pair Corralation between Lepanto Consolidated and Figaro Coffee
Assuming the 90 days trading horizon Lepanto Consolidated Mining is expected to under-perform the Figaro Coffee. In addition to that, Lepanto Consolidated is 1.65 times more volatile than Figaro Coffee Group. It trades about -0.27 of its total potential returns per unit of risk. Figaro Coffee Group is currently generating about -0.11 per unit of volatility. If you would invest 88.00 in Figaro Coffee Group on August 28, 2024 and sell it today you would lose (5.00) from holding Figaro Coffee Group or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lepanto Consolidated Mining vs. Figaro Coffee Group
Performance |
| Timeline |
| Lepanto Consolidated |
| Figaro Coffee Group |
Lepanto Consolidated and Figaro Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lepanto Consolidated and Figaro Coffee
The main advantage of trading using opposite Lepanto Consolidated and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lepanto Consolidated position performs unexpectedly, Figaro Coffee 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 Figaro Coffee will offset losses from the drop in Figaro Coffee's long position.| Lepanto Consolidated vs. Transpacific Broadband Group | Lepanto Consolidated vs. Crown Asia Chemicals | Lepanto Consolidated vs. Manila Mining Corp | Lepanto Consolidated vs. Suntrust Home Developers |
| Figaro Coffee vs. SM Investments Corp | Figaro Coffee vs. Suntrust Home Developers | Figaro Coffee vs. Allhome Corp | Figaro Coffee vs. Converge Information Communications |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |