Correlation Between Figaro Coffee and Cosco Capital

Can any of the company-specific risk be diversified away by investing in both Figaro Coffee and Cosco Capital 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 Cosco Capital 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 Cosco Capital, you can compare the effects of market volatilities on Figaro Coffee and Cosco Capital 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 Cosco Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figaro Coffee and Cosco Capital.

Diversification Opportunities for Figaro Coffee and Cosco Capital

-0.43

Correlation Coefficient

Figaro Coffee  Cosco Capital

Very good diversification

The 3 months correlation between Figaro and Cosco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Figaro Coffee Group and Cosco Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosco Capital 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 Cosco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosco Capital has no effect on the direction of Figaro Coffee i.e., Figaro Coffee and Cosco Capital go up and down completely randomly.

Pair Corralation between Figaro Coffee and Cosco Capital

Assuming the 90 days trading horizon Figaro Coffee is expected to generate 33.01 times less return on investment than Cosco Capital. In addition to that, Figaro Coffee is 1.11 times more volatile than Cosco Capital. It trades about 0.01 of its total potential returns per unit of risk. Cosco Capital is currently generating about 0.28 per unit of volatility. If you would invest  564.00  in Cosco Capital on April 22, 2025 and sell it today you would earn a total of  144.00  from holding Cosco Capital or generate 25.53% return on investment over 90 days.

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

Figaro Coffee Group  vs.  Cosco Capital

Figaro Coffee Group

Risk-Adjusted Performance

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.

Cosco Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cosco Capital are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Cosco Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Figaro Coffee and Cosco Capital

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

The idea behind Figaro Coffee Group and Cosco Capital 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.