Correlation Between Lincoln Educational and Coda Octopus

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

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

Diversification Opportunities for Lincoln Educational and Coda Octopus

-0.4

Correlation Coefficient

Lincoln Educational  Coda Octopus

Very good diversification

The 3 months correlation between Lincoln and Coda is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services 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 Lincoln Educational 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 Lincoln Educational Services 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 Lincoln Educational i.e., Lincoln Educational and Coda Octopus go up and down completely randomly.

Pair Corralation between Lincoln Educational and Coda Octopus

Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 2.38 times more return on investment than Coda Octopus. However, Lincoln Educational is 2.38 times more volatile than Coda Octopus Group. It trades about -0.11 of its potential returns per unit of risk. Coda Octopus Group is currently generating about -0.33 per unit of risk. If you would invest  1,744  in Lincoln Educational Services on December 10, 2024 and sell it today you would lose (203.00) from holding Lincoln Educational Services or give up 11.64% of portfolio value over 90 days.

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

Lincoln Educational Services  vs.  Coda Octopus Group

Lincoln Educational

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lincoln Educational Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lincoln Educational is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Lincoln Educational and Coda Octopus

The main advantage of trading using opposite Lincoln Educational and Coda Octopus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational 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 Lincoln Educational Services 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.