Correlation Between Coda Octopus and Wendys

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

Diversification Opportunities for Coda Octopus and Wendys

0.5

Correlation Coefficient

Coda Octopus  Wendys

Very weak diversification

The 3 months correlation between Coda and Wendys is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Coda Octopus i.e., Coda Octopus and Wendys go up and down completely randomly.

Pair Corralation between Coda Octopus and Wendys

Given the investment horizon of 90 days Coda Octopus Group is expected to generate 2.81 times more return on investment than Wendys. However, Coda Octopus is 2.81 times more volatile than The Wendys Co. It trades about 0.05 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.15 per unit of risk. If you would invest  882.00  in Coda Octopus Group on September 13, 2024 and sell it today you would earn a total of  18.00  from holding Coda Octopus Group or generate 2.04% return on investment over 90 days.

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

Coda Octopus Group  vs.  The Wendys Co

Coda Octopus Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Coda Octopus sustained solid returns over the last few months and may actually be approaching a breakup point.

The Wendys

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Wendys Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Wendys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Coda Octopus and Wendys

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

The idea behind Coda Octopus Group and The Wendys Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.