Correlation Between Aramark Holdings and Odyssey Marine

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

By analyzing existing cross correlation between Aramark Holdings and Odyssey Marine Exploration, you can compare the effects of market volatilities on Aramark Holdings and Odyssey Marine 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 Aramark Holdings with a short position of Odyssey Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aramark Holdings and Odyssey Marine.

Diversification Opportunities for Aramark Holdings and Odyssey Marine

-0.43

Correlation Coefficient

Aramark Holdings  Odyssey Marine

Very good diversification

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

Pair Corralation between Aramark Holdings and Odyssey Marine

Given the investment horizon of 90 days Aramark Holdings is expected to under-perform the Odyssey Marine. But the stock apears to be less risky and, when comparing its historical volatility, Aramark Holdings is 8.33 times less risky than Odyssey Marine. The stock trades about -0.32 of its potential returns per unit of risk. The Odyssey Marine Exploration is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Odyssey Marine Exploration on October 10, 2024 and sell it today you would earn a total of  25.00  from holding Odyssey Marine Exploration or generate 59.52% return on investment over 90 days.

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

Aramark Holdings  vs.  Odyssey Marine Exploration

Aramark Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aramark Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Aramark Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Odyssey Marine Explo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Marine Exploration are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Odyssey Marine showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aramark Holdings and Odyssey Marine

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

The idea behind Aramark Holdings and Odyssey Marine Exploration 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.