Correlation Between Coffee Holding and Armanino Foods

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

By analyzing existing cross correlation between Coffee Holding Co and Armanino Foods New, you can compare the effects of market volatilities on Coffee Holding and Armanino Foods 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 Armanino Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Armanino Foods.

Diversification Opportunities for Coffee Holding and Armanino Foods

0.65

Correlation Coefficient

Coffee Holding  Armanino Foods

Poor diversification

The 3 months correlation between Coffee and Armanino is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Armanino Foods New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armanino Foods New 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 Co are associated (or correlated) with Armanino Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armanino Foods New has no effect on the direction of Coffee Holding i.e., Coffee Holding and Armanino Foods go up and down completely randomly.

Pair Corralation between Coffee Holding and Armanino Foods

If you would invest  295.00  in Coffee Holding Co on September 15, 2024 and sell it today you would earn a total of  134.00  from holding Coffee Holding Co or generate 45.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Coffee Holding Co  vs.  Armanino Foods New

Coffee Holding

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Holding Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coffee Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

Armanino Foods New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armanino Foods New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Armanino Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Coffee Holding and Armanino Foods

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

The idea behind Coffee Holding Co and Armanino Foods New 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.