Correlation Between CROWN and Coda Octopus

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

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

Diversification Opportunities for CROWN and Coda Octopus

0.59

Correlation Coefficient

CROWN  Coda Octopus

Very weak diversification

The 3 months correlation between CROWN and Coda is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CROWN CASTLE INTL 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 CROWN 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 CROWN CASTLE INTL 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 CROWN i.e., CROWN and Coda Octopus go up and down completely randomly.

Pair Corralation between CROWN and Coda Octopus

Assuming the 90 days trading horizon CROWN CASTLE INTL is expected to generate 0.29 times more return on investment than Coda Octopus. However, CROWN CASTLE INTL is 3.5 times less risky than Coda Octopus. It trades about -0.23 of its potential returns per unit of risk. Coda Octopus Group is currently generating about -0.31 per unit of risk. If you would invest  9,858  in CROWN CASTLE INTL on October 5, 2024 and sell it today you would lose (293.00) from holding CROWN CASTLE INTL or give up 2.97% of portfolio value over 90 days.

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

CROWN CASTLE INTL  vs.  Coda Octopus Group

CROWN CASTLE INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Coda Octopus Group

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Coda Octopus Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Coda Octopus is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CROWN and Coda Octopus

The main advantage of trading using opposite CROWN and Coda Octopus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CROWN 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 CROWN CASTLE INTL 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .