Correlation Between Cass Information and Odyssey Marine

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

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

Diversification Opportunities for Cass Information and Odyssey Marine

-0.68

Correlation Coefficient

Cass Information  Odyssey Marine

Excellent diversification

The 3 months correlation between Cass and Odyssey is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems 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 Cass Information 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 Cass Information Systems 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 Cass Information i.e., Cass Information and Odyssey Marine go up and down completely randomly.

Pair Corralation between Cass Information and Odyssey Marine

Given the investment horizon of 90 days Cass Information Systems is expected to under-perform the Odyssey Marine. But the stock apears to be less risky and, when comparing its historical volatility, Cass Information Systems is 7.86 times less risky than Odyssey Marine. The stock trades about -0.01 of its potential returns per unit of risk. The Odyssey Marine Exploration is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Odyssey Marine Exploration on November 29, 2024 and sell it today you would lose (2.73) from holding Odyssey Marine Exploration or give up 5.93% of portfolio value over 90 days.

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

Cass Information Systems  vs.  Odyssey Marine Exploration

Cass Information Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cass Information Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cass Information is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Odyssey Marine Explo

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Marine Exploration are ranked lower than 4 (%) 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 Cass Information and Odyssey Marine

The main advantage of trading using opposite Cass Information and Odyssey Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information 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 Cass Information Systems 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.