Correlation Between THE PHILIPPINE and Figaro Coffee
Can any of the company-specific risk be diversified away by investing in both THE PHILIPPINE 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 THE PHILIPPINE and Figaro Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THE PHILIPPINE STOCK and Figaro Coffee Group, you can compare the effects of market volatilities on THE PHILIPPINE 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 THE PHILIPPINE with a short position of Figaro Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE PHILIPPINE and Figaro Coffee.
Diversification Opportunities for THE PHILIPPINE and Figaro Coffee
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THE and Figaro is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding THE PHILIPPINE STOCK 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 THE PHILIPPINE 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 THE PHILIPPINE STOCK 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 THE PHILIPPINE i.e., THE PHILIPPINE and Figaro Coffee go up and down completely randomly.
Pair Corralation between THE PHILIPPINE and Figaro Coffee
Assuming the 90 days trading horizon THE PHILIPPINE is expected to generate 8.07 times less return on investment than Figaro Coffee. But when comparing it to its historical volatility, THE PHILIPPINE STOCK is 2.59 times less risky than Figaro Coffee. It trades about 0.01 of its potential returns per unit of risk. Figaro Coffee Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 75.00 in Figaro Coffee Group on August 31, 2024 and sell it today you would earn a total of 9.00 from holding Figaro Coffee Group or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.45% |
| Values | Daily Returns |
THE PHILIPPINE STOCK vs. Figaro Coffee Group
Performance |
| Timeline |
THE PHILIPPINE and Figaro Coffee Volatility Contrast
Predicted Return Density |
| Returns |
THE PHILIPPINE STOCK
Pair trading matchups for THE PHILIPPINE
Figaro Coffee Group
Pair trading matchups for Figaro Coffee
Pair Trading with THE PHILIPPINE and Figaro Coffee
The main advantage of trading using opposite THE PHILIPPINE and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE PHILIPPINE 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.| THE PHILIPPINE vs. Semirara Mining Corp | THE PHILIPPINE vs. Philippine Savings Bank | THE PHILIPPINE vs. SM Investments Corp | THE PHILIPPINE vs. Converge Information Communications |
| Figaro Coffee vs. Jollibee Foods Corp | Figaro Coffee vs. Berjaya Philippines | Figaro Coffee vs. Pacificonline Systems |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |