Correlation Between Coda Octopus and Garmin

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

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

Diversification Opportunities for Coda Octopus and Garmin

0.24

Correlation Coefficient

Coda Octopus  Garmin

Modest diversification

The 3 months correlation between Coda and Garmin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin and Coda Octopus 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 Coda Octopus Group are associated (or correlated) with Garmin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garmin has no effect on the direction of Coda Octopus i.e., Coda Octopus and Garmin go up and down completely randomly.

Pair Corralation between Coda Octopus and Garmin

Given the investment horizon of 90 days Coda Octopus Group is expected to under-perform the Garmin. But the stock apears to be less risky and, when comparing its historical volatility, Coda Octopus Group is 1.16 times less risky than Garmin. The stock trades about -0.01 of its potential returns per unit of risk. The Garmin is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  16,571  in Garmin on October 26, 2024 and sell it today you would earn a total of  4,987  from holding Garmin or generate 30.09% return on investment over 90 days.

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

Coda Octopus Group  vs.  Garmin

Coda Octopus Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coda Octopus Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Coda Octopus is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Garmin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Garmin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coda Octopus and Garmin

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

The idea behind Coda Octopus Group and Garmin 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.