Correlation Between Coffee Holding and CyberAgent

Can any of the company-specific risk be diversified away by investing in both Coffee Holding and CyberAgent 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 CyberAgent 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 CyberAgent, you can compare the effects of market volatilities on Coffee Holding and CyberAgent 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 CyberAgent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and CyberAgent.

Diversification Opportunities for Coffee Holding and CyberAgent

0.0

Correlation Coefficient

Coffee Holding  CyberAgent

Pay attention - limited upside

The 3 months correlation between Coffee and CyberAgent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and CyberAgent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent 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 CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent has no effect on the direction of Coffee Holding i.e., Coffee Holding and CyberAgent go up and down completely randomly.

Pair Corralation between Coffee Holding and CyberAgent

If you would invest  314.00  in Coffee Holding Co on October 21, 2024 and sell it today you would earn a total of  44.00  from holding Coffee Holding Co or generate 14.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Coffee Holding Co  vs.  CyberAgent

Coffee Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Holding Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Coffee Holding reported solid returns over the last few months and may actually be approaching a breakup point.

CyberAgent

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CyberAgent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CyberAgent is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Coffee Holding and CyberAgent

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

The idea behind Coffee Holding Co and CyberAgent 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.