Correlation Between Armada Hflr and Octodec

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

By analyzing existing cross correlation between Armada Hflr Pr and Octodec, you can compare the effects of market volatilities on Armada Hflr and Octodec 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 Armada Hflr with a short position of Octodec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Octodec.

Diversification Opportunities for Armada Hflr and Octodec

0.34

Correlation Coefficient

Armada Hflr  Octodec

Weak diversification

The 3 months correlation between Armada and Octodec is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Octodec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octodec and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Octodec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octodec has no effect on the direction of Armada Hflr i.e., Armada Hflr and Octodec go up and down completely randomly.

Pair Corralation between Armada Hflr and Octodec

Considering the 90-day investment horizon Armada Hflr is expected to generate 11.2 times less return on investment than Octodec. But when comparing it to its historical volatility, Armada Hflr Pr is 1.09 times less risky than Octodec. It trades about 0.0 of its potential returns per unit of risk. Octodec is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  93,996  in Octodec on October 3, 2024 and sell it today you would earn a total of  21,004  from holding Octodec or generate 22.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.99%
Values	Daily Returns

Armada Hflr Pr  vs.  Octodec

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Octodec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Octodec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Octodec is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Armada Hflr and Octodec

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

The idea behind Armada Hflr Pr and Octodec 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.