Correlation Between Coda Octopus and HEICO
Can any of the company-specific risk be diversified away by investing in both Coda Octopus and HEICO 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 Coda Octopus and HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coda Octopus Group and HEICO, you can compare the effects of market volatilities on Coda Octopus and HEICO 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 Coda Octopus with a short position of HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coda Octopus and HEICO.
Diversification Opportunities for Coda Octopus and HEICO
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coda and HEICO is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO and Coda Octopus 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 Coda Octopus Group are associated (or correlated) with HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Coda Octopus i.e., Coda Octopus and HEICO go up and down completely randomly.
Pair Corralation between Coda Octopus and HEICO
Given the investment horizon of 90 days Coda Octopus is expected to generate 3.17 times less return on investment than HEICO. In addition to that, Coda Octopus is 1.96 times more volatile than HEICO. It trades about 0.05 of its total potential returns per unit of risk. HEICO is currently generating about 0.31 per unit of volatility. If you would invest 19,436 in HEICO on August 29, 2024 and sell it today you would earn a total of 2,051 from holding HEICO or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coda Octopus Group vs. HEICO
Performance |
| Timeline |
| Coda Octopus Group |
| HEICO |
Coda Octopus and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coda Octopus and HEICO
The main advantage of trading using opposite Coda Octopus and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus position performs unexpectedly, HEICO 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 HEICO will offset losses from the drop in HEICO's long position.| Coda Octopus vs. Ducommun Incorporated | Coda Octopus vs. Park Electrochemical | Coda Octopus vs. National Presto Industries | Coda Octopus vs. Astronics |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
Check out your portfolio center.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 .
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