Correlation Between Dine Brands and Coda Octopus

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

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

Diversification Opportunities for Dine Brands and Coda Octopus

0.68

Correlation Coefficient

Dine Brands  Coda Octopus

Poor diversification

The 3 months correlation between Dine and Coda is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dine Brands Global 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 Dine Brands 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 Dine Brands Global 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 Dine Brands i.e., Dine Brands and Coda Octopus go up and down completely randomly.

Pair Corralation between Dine Brands and Coda Octopus

Considering the 90-day investment horizon Dine Brands Global is expected to under-perform the Coda Octopus. But the stock apears to be less risky and, when comparing its historical volatility, Dine Brands Global is 1.07 times less risky than Coda Octopus. The stock trades about -0.06 of its potential returns per unit of risk. The Coda Octopus Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  629.00  in Coda Octopus Group on December 4, 2024 and sell it today you would earn a total of  107.00  from holding Coda Octopus Group or generate 17.01% return on investment over 90 days.

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

Dine Brands Global  vs.  Coda Octopus Group

Dine Brands Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dine Brands Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 Dine Brands and Coda Octopus

The main advantage of trading using opposite Dine Brands and Coda Octopus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dine Brands 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 Dine Brands Global 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.