Correlation Between COFFEE HOLDING and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both COFFEE HOLDING and UNIVERSAL MUSIC 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 UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COFFEE HOLDING and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on COFFEE HOLDING and UNIVERSAL MUSIC 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 UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFFEE HOLDING and UNIVERSAL MUSIC.
Diversification Opportunities for COFFEE HOLDING and UNIVERSAL MUSIC
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COFFEE and UNIVERSAL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding COFFEE HOLDING and UNIVERSAL MUSIC GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL MUSIC GROUP 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 are associated (or correlated) with UNIVERSAL MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL MUSIC GROUP has no effect on the direction of COFFEE HOLDING i.e., COFFEE HOLDING and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between COFFEE HOLDING and UNIVERSAL MUSIC
Assuming the 90 days trading horizon COFFEE HOLDING is expected to generate 2.54 times more return on investment than UNIVERSAL MUSIC. However, COFFEE HOLDING is 2.54 times more volatile than UNIVERSAL MUSIC GROUP. It trades about -0.03 of its potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about -0.08 per unit of risk. If you would invest 346.00 in COFFEE HOLDING on September 2, 2025 and sell it today you would lose (34.00) from holding COFFEE HOLDING or give up 9.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COFFEE HOLDING vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| COFFEE HOLDING |
| UNIVERSAL MUSIC GROUP |
COFFEE HOLDING and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COFFEE HOLDING and UNIVERSAL MUSIC
The main advantage of trading using opposite COFFEE HOLDING and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFFEE HOLDING position performs unexpectedly, UNIVERSAL MUSIC 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 UNIVERSAL MUSIC will offset losses from the drop in UNIVERSAL MUSIC's long position.| COFFEE HOLDING vs. Stag Industrial | COFFEE HOLDING vs. Transport International Holdings | COFFEE HOLDING vs. PARKEN Sport Entertainment | COFFEE HOLDING vs. Zoom Video Communications |
| UNIVERSAL MUSIC vs. ZEDER INVESTMENTS | UNIVERSAL MUSIC vs. NXP Semiconductors NV | UNIVERSAL MUSIC vs. Nordic Semiconductor ASA | UNIVERSAL MUSIC vs. JLF 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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