Correlation Between Figaro Coffee and Converge Information

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

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

Diversification Opportunities for Figaro Coffee and Converge Information

-0.11

Correlation Coefficient

Figaro Coffee  Converge Information

Good diversification

The 3 months correlation between Figaro and Converge is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and Figaro Coffee 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 Figaro Coffee Group are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and Converge Information go up and down completely randomly.

Pair Corralation between Figaro Coffee and Converge Information

Assuming the 90 days trading horizon Figaro Coffee Group is expected to under-perform the Converge Information. But the stock apears to be less risky and, when comparing its historical volatility, Figaro Coffee Group is 1.53 times less risky than Converge Information. The stock trades about -0.06 of its potential returns per unit of risk. The Converge Information Communications is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,946  in Converge Information Communications on April 24, 2025 and sell it today you would lose (102.00) from holding Converge Information Communications or give up 5.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Figaro Coffee Group  vs.  Converge Information Communica

Figaro Coffee Group

Risk-Adjusted Performance

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Converge Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Converge Information Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Converge Information is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Figaro Coffee and Converge Information

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

The idea behind Figaro Coffee Group and Converge Information Communications 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.