Correlation Between Graf Global and Coda Octopus

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

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

Diversification Opportunities for Graf Global and Coda Octopus

0.6

Correlation Coefficient

Graf Global  Coda Octopus

Poor diversification

The 3 months correlation between Graf and Coda is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Graf Global Corp 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 Graf Global 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 Graf Global Corp 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 Graf Global i.e., Graf Global and Coda Octopus go up and down completely randomly.

Pair Corralation between Graf Global and Coda Octopus

Given the investment horizon of 90 days Graf Global Corp is expected to generate 0.05 times more return on investment than Coda Octopus. However, Graf Global Corp is 18.92 times less risky than Coda Octopus. It trades about 0.14 of its potential returns per unit of risk. Coda Octopus Group is currently generating about -0.02 per unit of risk. If you would invest  1,002  in Graf Global Corp on September 19, 2024 and sell it today you would earn a total of  5.00  from holding Graf Global Corp or generate 0.5% return on investment over 90 days.

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

Graf Global Corp  vs.  Coda Octopus Group

Graf Global Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graf Global Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Graf Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Coda Octopus Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Coda Octopus sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graf Global and Coda Octopus

The main advantage of trading using opposite Graf Global and Coda Octopus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graf Global 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 Graf Global Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.