Correlation Between Berjaya Philippines and Figaro Coffee

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

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

Diversification Opportunities for Berjaya Philippines and Figaro Coffee

0.39

Correlation Coefficient

Berjaya Philippines  Figaro Coffee

Weak diversification

The 3 months correlation between Berjaya and Figaro is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Berjaya Philippines 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 Berjaya Philippines 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 Berjaya Philippines 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 Berjaya Philippines i.e., Berjaya Philippines and Figaro Coffee go up and down completely randomly.

Pair Corralation between Berjaya Philippines and Figaro Coffee

Assuming the 90 days trading horizon Berjaya Philippines is expected to generate 3.03 times more return on investment than Figaro Coffee. However, Berjaya Philippines is 3.03 times more volatile than Figaro Coffee Group. It trades about 0.07 of its potential returns per unit of risk. Figaro Coffee Group is currently generating about 0.08 per unit of risk. If you would invest  751.00  in Berjaya Philippines on September 24, 2024 and sell it today you would earn a total of  177.00  from holding Berjaya Philippines or generate 23.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	39.75%
Values	Daily Returns

Berjaya Philippines  vs.  Figaro Coffee Group

Berjaya Philippines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berjaya Philippines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Berjaya Philippines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Figaro Coffee Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Figaro Coffee Group are ranked lower than 6 (%) 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 Berjaya Philippines and Figaro Coffee

The main advantage of trading using opposite Berjaya Philippines and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berjaya Philippines 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 Berjaya Philippines 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..