Correlation Between Robinsons Retail and Figaro Coffee

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

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

Diversification Opportunities for Robinsons Retail and Figaro Coffee

0.33

Correlation Coefficient

Robinsons Retail  Figaro Coffee

Weak diversification

The 3 months correlation between Robinsons and Figaro is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Robinsons Retail Holdings 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 Robinsons Retail 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 Robinsons Retail Holdings 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 Robinsons Retail i.e., Robinsons Retail and Figaro Coffee go up and down completely randomly.

Pair Corralation between Robinsons Retail and Figaro Coffee

Assuming the 90 days trading horizon Robinsons Retail Holdings is expected to under-perform the Figaro Coffee. But the stock apears to be less risky and, when comparing its historical volatility, Robinsons Retail Holdings is 1.55 times less risky than Figaro Coffee. The stock trades about -0.16 of its potential returns per unit of risk. The Figaro Coffee Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Figaro Coffee Group on October 25, 2024 and sell it today you would lose (5.00) from holding Figaro Coffee Group or give up 5.62% of portfolio value over 90 days.

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

Robinsons Retail Holdings  vs.  Figaro Coffee Group

Robinsons Retail Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robinsons Retail Holdings 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Figaro Coffee Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Figaro Coffee Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Figaro Coffee is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Robinsons Retail and Figaro Coffee

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

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.