Correlation Between Coffee Holding and China Marine

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

Diversification Opportunities for Coffee Holding and China Marine

-0.7

Correlation Coefficient

Coffee Holding  China Marine

Excellent diversification

The 3 months correlation between Coffee and China is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and China Marine Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Marine Food 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 China Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Marine Food has no effect on the direction of Coffee Holding i.e., Coffee Holding and China Marine go up and down completely randomly.

Pair Corralation between Coffee Holding and China Marine

If you would invest  319.00  in Coffee Holding Co on October 25, 2024 and sell it today you would earn a total of  55.00  from holding Coffee Holding Co or generate 17.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.67%
Values	Daily Returns

Coffee Holding Co  vs.  China Marine Food

Coffee Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Holding Co are ranked lower than 6 (%) 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.

China Marine Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Marine Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, China Marine is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Coffee Holding and China Marine

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

The idea behind Coffee Holding Co and China Marine Food 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.