Correlation Between Pacificonline Systems and Figaro Coffee

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

By analyzing existing cross correlation between Pacificonline Systems and Figaro Coffee Group, you can compare the effects of market volatilities on Pacificonline Systems 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 Pacificonline Systems with a short position of Figaro Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacificonline Systems and Figaro Coffee.

Diversification Opportunities for Pacificonline Systems and Figaro Coffee

-0.2

Correlation Coefficient

Pacificonline Systems  Figaro Coffee

Good diversification

The 3 months correlation between Pacificonline and Figaro is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pacificonline Systems 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 Pacificonline Systems 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 Pacificonline Systems 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 Pacificonline Systems i.e., Pacificonline Systems and Figaro Coffee go up and down completely randomly.

Pair Corralation between Pacificonline Systems and Figaro Coffee

Assuming the 90 days trading horizon Pacificonline Systems is expected to under-perform the Figaro Coffee. In addition to that, Pacificonline Systems is 1.06 times more volatile than Figaro Coffee Group. It trades about -0.17 of its total potential returns per unit of risk. Figaro Coffee Group is currently generating about 0.08 per unit of volatility. If you would invest  77.00  in Figaro Coffee Group on August 30, 2024 and sell it today you would earn a total of  9.00  from holding Figaro Coffee Group or generate 11.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Pacificonline Systems  vs.  Figaro Coffee Group

Pacificonline Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacificonline Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Figaro Coffee Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Figaro Coffee Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Figaro Coffee exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacificonline Systems and Figaro Coffee

The main advantage of trading using opposite Pacificonline Systems and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacificonline Systems 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.

The idea behind Pacificonline Systems and Figaro Coffee Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.