Correlation Between Coda Octopus and CIMG

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

Diversification Opportunities for Coda Octopus and CIMG

0.22

Correlation Coefficient

Coda Octopus  CIMG

Modest diversification

The 3 months correlation between Coda and CIMG is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and CIMG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMG Inc 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 CIMG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMG Inc has no effect on the direction of Coda Octopus i.e., Coda Octopus and CIMG go up and down completely randomly.

Pair Corralation between Coda Octopus and CIMG

Given the investment horizon of 90 days Coda Octopus is expected to generate 40.88 times less return on investment than CIMG. But when comparing it to its historical volatility, Coda Octopus Group is 25.18 times less risky than CIMG. It trades about 0.07 of its potential returns per unit of risk. CIMG Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  49.00  in CIMG Inc on September 29, 2024 and sell it today you would earn a total of  34.00  from holding CIMG Inc or generate 69.39% 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.  CIMG Inc

Coda Octopus Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Coda Octopus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CIMG Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CIMG Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal primary indicators, CIMG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coda Octopus and CIMG

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

The idea behind Coda Octopus Group and CIMG Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.