Correlation Between Aryzta AG and Coffee Holding

Can any of the company-specific risk be diversified away by investing in both Aryzta AG and Coffee Holding 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 Aryzta AG and Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aryzta AG PK and Coffee Holding Co, you can compare the effects of market volatilities on Aryzta AG and Coffee Holding 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 Aryzta AG with a short position of Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aryzta AG and Coffee Holding.

Diversification Opportunities for Aryzta AG and Coffee Holding

-0.39

Correlation Coefficient

Aryzta AG  Coffee Holding

Very good diversification

The 3 months correlation between Aryzta and Coffee is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding and Aryzta AG 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 Aryzta AG PK are associated (or correlated) with Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of Aryzta AG i.e., Aryzta AG and Coffee Holding go up and down completely randomly.

Pair Corralation between Aryzta AG and Coffee Holding

Assuming the 90 days horizon Aryzta AG PK is expected to under-perform the Coffee Holding. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aryzta AG PK is 3.28 times less risky than Coffee Holding. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Coffee Holding Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Coffee Holding Co on August 30, 2024 and sell it today you would earn a total of  124.00  from holding Coffee Holding Co or generate 54.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aryzta AG PK  vs.  Coffee Holding Co

Aryzta AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aryzta AG PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Coffee Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Holding Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coffee Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aryzta AG and Coffee Holding

The main advantage of trading using opposite Aryzta AG and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aryzta AG position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding's long position.

The idea behind Aryzta AG PK and Coffee Holding Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.