Correlation Between COFFEE HOLDING and CARSALES
Can any of the company-specific risk be diversified away by investing in both COFFEE HOLDING and CARSALES 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 CARSALES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COFFEE HOLDING and CARSALESCOM, you can compare the effects of market volatilities on COFFEE HOLDING and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of COFFEE HOLDING and CARSALES.
Diversification Opportunities for COFFEE HOLDING and CARSALES
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COFFEE and CARSALES is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding COFFEE HOLDING and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of COFFEE HOLDING i.e., COFFEE HOLDING and CARSALES go up and down completely randomly.
Pair Corralation between COFFEE HOLDING and CARSALES
Assuming the 90 days trading horizon COFFEE HOLDING is expected to generate 2.67 times more return on investment than CARSALES. However, COFFEE HOLDING is 2.67 times more volatile than CARSALESCOM. It trades about -0.01 of its potential returns per unit of risk. CARSALESCOM is currently generating about -0.17 per unit of risk. If you would invest 344.00 in COFFEE HOLDING on August 28, 2025 and sell it today you would lose (24.00) from holding COFFEE HOLDING or give up 6.98% 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. CARSALESCOM
Performance |
| Timeline |
| COFFEE HOLDING |
| CARSALESCOM |
COFFEE HOLDING and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COFFEE HOLDING and CARSALES
The main advantage of trading using opposite COFFEE HOLDING and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COFFEE HOLDING position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| COFFEE HOLDING vs. Apple Inc | COFFEE HOLDING vs. Apple Inc | COFFEE HOLDING vs. Apple Inc | COFFEE HOLDING vs. Apple Inc |
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 Stocks Directory module to find actively traded stocks across global markets.
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