Correlation Between Coda Octopus and Interactive Brokers

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Can any of the company-specific risk be diversified away by investing in both Coda Octopus and Interactive Brokers 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 Interactive Brokers 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 Interactive Brokers Group, you can compare the effects of market volatilities on Coda Octopus and Interactive Brokers 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 Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coda Octopus and Interactive Brokers.

Diversification Opportunities for Coda Octopus and Interactive Brokers

0.24
  Correlation Coefficient

Modest diversification

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

Pair Corralation between Coda Octopus and Interactive Brokers

Given the investment horizon of 90 days Coda Octopus is expected to generate 2.71 times less return on investment than Interactive Brokers. In addition to that, Coda Octopus is 1.61 times more volatile than Interactive Brokers Group. It trades about 0.03 of its total potential returns per unit of risk. Interactive Brokers Group is currently generating about 0.12 per unit of volatility. If you would invest  8,326  in Interactive Brokers Group on October 25, 2024 and sell it today you would earn a total of  12,652  from holding Interactive Brokers Group or generate 151.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Coda Octopus Group  vs.  Interactive Brokers Group

 Performance 
       Timeline  
Coda Octopus Group 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.
Interactive Brokers 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Brokers Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Interactive Brokers reported solid returns over the last few months and may actually be approaching a breakup point.

Coda Octopus and Interactive Brokers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coda Octopus and Interactive Brokers

The main advantage of trading using opposite Coda Octopus and Interactive Brokers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus position performs unexpectedly, Interactive Brokers 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 Interactive Brokers will offset losses from the drop in Interactive Brokers' long position.
The idea behind Coda Octopus Group and Interactive Brokers Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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