Correlation Between Union Bank and Figaro Coffee
Can any of the company-specific risk be diversified away by investing in both Union Bank 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 Union Bank and Figaro Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Bank of and Figaro Coffee Group, you can compare the effects of market volatilities on Union Bank 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 Union Bank with a short position of Figaro Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and Figaro Coffee.
Diversification Opportunities for Union Bank and Figaro Coffee
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Union and Figaro is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Union Bank of 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 Union Bank 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 Union Bank of 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 Union Bank i.e., Union Bank and Figaro Coffee go up and down completely randomly.
Pair Corralation between Union Bank and Figaro Coffee
Assuming the 90 days trading horizon Union Bank is expected to generate 6.87 times less return on investment than Figaro Coffee. But when comparing it to its historical volatility, Union Bank of is 1.23 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 0.07 of returns per unit of risk over similar time horizon. If you would invest 86.00 in Figaro Coffee Group on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Figaro Coffee Group or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Bank of vs. Figaro Coffee Group
Performance |
| Timeline |
| Union Bank |
| Figaro Coffee Group |
Union Bank and Figaro Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Bank and Figaro Coffee
The main advantage of trading using opposite Union Bank and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Bank 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.| Union Bank vs. Security Bank Corp | Union Bank vs. Alliance Select Foods | Union Bank vs. Prime Media Holdings | Union Bank vs. Robinsons Retail Holdings |
| Figaro Coffee vs. Jollibee Foods Corp | Figaro Coffee vs. Atlas Consolidated Mining | Figaro Coffee vs. National Reinsurance | Figaro Coffee vs. Union Bank of |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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