Correlation Between Codan and Sono Tek
Can any of the company-specific risk be diversified away by investing in both Codan and Sono Tek 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 Codan and Sono Tek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Codan Limited and Sono Tek Corp, you can compare the effects of market volatilities on Codan and Sono Tek 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 Codan with a short position of Sono Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Codan and Sono Tek.
Diversification Opportunities for Codan and Sono Tek
Significant diversification
The 3 months correlation between Codan and Sono is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Codan Limited and Sono Tek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sono Tek Corp and Codan 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 Codan Limited are associated (or correlated) with Sono Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sono Tek Corp has no effect on the direction of Codan i.e., Codan and Sono Tek go up and down completely randomly.
Pair Corralation between Codan and Sono Tek
If you would invest 415.00 in Sono Tek Corp on August 28, 2024 and sell it today you would earn a total of 47.00 from holding Sono Tek Corp or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 6.35% |
| Values | Daily Returns |
Codan Limited vs. Sono Tek Corp
Performance |
| Timeline |
| Codan Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sono Tek Corp |
Codan and Sono Tek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Codan and Sono Tek
The main advantage of trading using opposite Codan and Sono Tek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Codan position performs unexpectedly, Sono Tek 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 Sono Tek will offset losses from the drop in Sono Tek's long position.| Codan vs. Nanalysis Scientific Corp | Codan vs. Genasys | Codan vs. Kraken Robotics | Codan vs. Teledyne Technologies Incorporated |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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