Correlation Between Coda Octopus and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Coda Octopus and NETGEAR 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 NETGEAR 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 NETGEAR, you can compare the effects of market volatilities on Coda Octopus and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coda Octopus and NETGEAR.
Diversification Opportunities for Coda Octopus and NETGEAR
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coda and NETGEAR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Coda Octopus i.e., Coda Octopus and NETGEAR go up and down completely randomly.
Pair Corralation between Coda Octopus and NETGEAR
Given the investment horizon of 90 days Coda Octopus Group is expected to under-perform the NETGEAR. But the stock apears to be less risky and, when comparing its historical volatility, Coda Octopus Group is 1.17 times less risky than NETGEAR. The stock trades about -0.17 of its potential returns per unit of risk. The NETGEAR is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,814 in NETGEAR on December 27, 2024 and sell it today you would lose (331.00) from holding NETGEAR or give up 11.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Coda Octopus Group vs. NETGEAR
Performance |
Timeline |
Coda Octopus Group |
NETGEAR |
Coda Octopus and NETGEAR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Coda Octopus and NETGEAR
The main advantage of trading using opposite Coda Octopus and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.Coda Octopus vs. Ducommun Incorporated | Coda Octopus vs. Park Electrochemical | Coda Octopus vs. National Presto Industries | Coda Octopus vs. Astronics |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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