Correlation Between Atlas Consolidated and Figaro Coffee

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

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

Diversification Opportunities for Atlas Consolidated and Figaro Coffee

0.34

Correlation Coefficient

Atlas Consolidated  Figaro Coffee

Weak diversification

The 3 months correlation between Atlas and Figaro is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Consolidated Mining 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 Atlas Consolidated 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 Atlas Consolidated Mining 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 Atlas Consolidated i.e., Atlas Consolidated and Figaro Coffee go up and down completely randomly.

Pair Corralation between Atlas Consolidated and Figaro Coffee

Assuming the 90 days trading horizon Atlas Consolidated Mining is expected to under-perform the Figaro Coffee. But the stock apears to be less risky and, when comparing its historical volatility, Atlas Consolidated Mining is 1.09 times less risky than Figaro Coffee. The stock trades about -0.14 of its potential returns per unit of risk. The Figaro Coffee Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Figaro Coffee Group on September 14, 2024 and sell it today you would earn a total of  7.00  from holding Figaro Coffee Group or generate 9.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Atlas Consolidated Mining  vs.  Figaro Coffee Group

Atlas Consolidated Mining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Consolidated Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Atlas Consolidated is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Figaro Coffee Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Figaro Coffee Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Figaro Coffee may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Atlas Consolidated and Figaro Coffee

The main advantage of trading using opposite Atlas Consolidated and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Consolidated 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 Atlas Consolidated Mining 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.