Correlation Between Ducommun Incorporated and Coda Octopus

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

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

Diversification Opportunities for Ducommun Incorporated and Coda Octopus

0.73

Correlation Coefficient

Ducommun Incorporated  Coda Octopus

Poor diversification

The 3 months correlation between Ducommun and Coda is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ducommun Incorporated and Coda Octopus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coda Octopus Group and Ducommun Incorporated 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 Ducommun Incorporated are associated (or correlated) with Coda Octopus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coda Octopus Group has no effect on the direction of Ducommun Incorporated i.e., Ducommun Incorporated and Coda Octopus go up and down completely randomly.

Pair Corralation between Ducommun Incorporated and Coda Octopus

Considering the 90-day investment horizon Ducommun Incorporated is expected to generate 0.7 times more return on investment than Coda Octopus. However, Ducommun Incorporated is 1.44 times less risky than Coda Octopus. It trades about -0.01 of its potential returns per unit of risk. Coda Octopus Group is currently generating about -0.17 per unit of risk. If you would invest  6,085  in Ducommun Incorporated on December 27, 2024 and sell it today you would lose (99.00) from holding Ducommun Incorporated or give up 1.63% of portfolio value over 90 days.

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

Ducommun Incorporated  vs.  Coda Octopus Group

Ducommun Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ducommun Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Ducommun Incorporated is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Coda Octopus Group

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ducommun Incorporated and Coda Octopus

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

The idea behind Ducommun Incorporated and Coda Octopus 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.