Correlation Between Odyssey Marine and Eco Innovation

Can any of the company-specific risk be diversified away by investing in both Odyssey Marine and Eco Innovation 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 Odyssey Marine and Eco Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Odyssey Marine Exploration and Eco Innovation Group, you can compare the effects of market volatilities on Odyssey Marine and Eco Innovation 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 Odyssey Marine with a short position of Eco Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odyssey Marine and Eco Innovation.

Diversification Opportunities for Odyssey Marine and Eco Innovation

-0.34

Correlation Coefficient

Odyssey Marine  Eco Innovation

Very good diversification

The 3 months correlation between Odyssey and Eco is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Odyssey Marine Exploration and Eco Innovation Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Innovation Group and Odyssey Marine 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 Odyssey Marine Exploration are associated (or correlated) with Eco Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Innovation Group has no effect on the direction of Odyssey Marine i.e., Odyssey Marine and Eco Innovation go up and down completely randomly.

Pair Corralation between Odyssey Marine and Eco Innovation

Given the investment horizon of 90 days Odyssey Marine is expected to generate 30.6 times less return on investment than Eco Innovation. But when comparing it to its historical volatility, Odyssey Marine Exploration is 31.29 times less risky than Eco Innovation. It trades about 0.29 of its potential returns per unit of risk. Eco Innovation Group is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Eco Innovation Group on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Eco Innovation Group or generate 0.0% return on investment over 90 days.

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

Odyssey Marine Exploration  vs.  Eco Innovation Group

Odyssey Marine Explo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Marine Exploration are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Odyssey Marine showed solid returns over the last few months and may actually be approaching a breakup point.

Eco Innovation Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Innovation Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Eco Innovation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Odyssey Marine and Eco Innovation

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

The idea behind Odyssey Marine Exploration and Eco Innovation 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.