Correlation Between Coffee Holding and Aryzta AG

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

Diversification Opportunities for Coffee Holding and Aryzta AG

0.68

Correlation Coefficient

Coffee Holding  Aryzta AG

Poor diversification

The 3 months correlation between Coffee and Aryzta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Aryzta AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aryzta AG PK 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 Aryzta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aryzta AG PK has no effect on the direction of Coffee Holding i.e., Coffee Holding and Aryzta AG go up and down completely randomly.

Pair Corralation between Coffee Holding and Aryzta AG

Considering the 90-day investment horizon Coffee Holding is expected to generate 2.89 times less return on investment than Aryzta AG. In addition to that, Coffee Holding is 1.75 times more volatile than Aryzta AG PK. It trades about 0.02 of its total potential returns per unit of risk. Aryzta AG PK is currently generating about 0.11 per unit of volatility. If you would invest  86.00  in Aryzta AG PK on December 29, 2024 and sell it today you would earn a total of  24.00  from holding Aryzta AG PK or generate 27.91% return on investment over 90 days.

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

Coffee Holding Co  vs.  Aryzta AG PK

Coffee Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Holding Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coffee Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aryzta AG PK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG PK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coffee Holding and Aryzta AG

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

The idea behind Coffee Holding Co and Aryzta AG PK 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.