Correlation Between Odyssey Marine and Network 1

Can any of the company-specific risk be diversified away by investing in both Odyssey Marine and Network 1 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 Network 1 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 Network 1 Technologies, you can compare the effects of market volatilities on Odyssey Marine and Network 1 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 Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odyssey Marine and Network 1.

Diversification Opportunities for Odyssey Marine and Network 1

0.39

Correlation Coefficient

Odyssey Marine  Network 1

Weak diversification

The 3 months correlation between Odyssey and Network is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Odyssey Marine Exploration and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies 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 Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of Odyssey Marine i.e., Odyssey Marine and Network 1 go up and down completely randomly.

Pair Corralation between Odyssey Marine and Network 1

Given the investment horizon of 90 days Odyssey Marine Exploration is expected to generate 6.39 times more return on investment than Network 1. However, Odyssey Marine is 6.39 times more volatile than Network 1 Technologies. It trades about 0.13 of its potential returns per unit of risk. Network 1 Technologies is currently generating about 0.11 per unit of risk. If you would invest  45.00  in Odyssey Marine Exploration on October 11, 2024 and sell it today you would earn a total of  22.00  from holding Odyssey Marine Exploration or generate 48.89% return on investment over 90 days.

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

Odyssey Marine Exploration  vs.  Network 1 Technologies

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.

Network 1 Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Network 1 Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Network 1 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Odyssey Marine and Network 1

The main advantage of trading using opposite Odyssey Marine and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odyssey Marine position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.

The idea behind Odyssey Marine Exploration and Network 1 Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.