Correlation Between Safran SA and Coda Octopus
Can any of the company-specific risk be diversified away by investing in both Safran SA 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 Safran SA and Coda Octopus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Coda Octopus Group, you can compare the effects of market volatilities on Safran SA 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 Safran SA with a short position of Coda Octopus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Coda Octopus.
Diversification Opportunities for Safran SA and Coda Octopus
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Safran and Coda is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA 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 Safran SA 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 Safran SA 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 Safran SA i.e., Safran SA and Coda Octopus go up and down completely randomly.
Pair Corralation between Safran SA and Coda Octopus
Assuming the 90 days horizon Safran SA is expected to generate 8.68 times less return on investment than Coda Octopus. But when comparing it to its historical volatility, Safran SA is 1.99 times less risky than Coda Octopus. It trades about 0.05 of its potential returns per unit of risk. Coda Octopus Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 819.00 in Coda Octopus Group on August 25, 2024 and sell it today you would earn a total of 113.00 from holding Coda Octopus Group or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Safran SA vs. Coda Octopus Group
Performance |
| Timeline |
| Safran SA |
| Coda Octopus Group |
Safran SA and Coda Octopus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Coda Octopus
The main advantage of trading using opposite Safran SA and Coda Octopus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA 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.| Safran SA vs. Airbus Group NV | Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Airbus Group SE |
| Coda Octopus vs. Ducommun Incorporated | Coda Octopus vs. Park Electrochemical | Coda Octopus vs. National Presto Industries | Coda Octopus vs. Astronics |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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