Correlation Between Coda Octopus and Airbus Group

Can any of the company-specific risk be diversified away by investing in both Coda Octopus and Airbus Group 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 Airbus Group 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 Airbus Group NV, you can compare the effects of market volatilities on Coda Octopus and Airbus Group 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 Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coda Octopus and Airbus Group.

Diversification Opportunities for Coda Octopus and Airbus Group

0.5

Correlation Coefficient

Coda Octopus  Airbus Group

Very weak diversification

The 3 months correlation between Coda and Airbus is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and Airbus Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group NV 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group NV has no effect on the direction of Coda Octopus i.e., Coda Octopus and Airbus Group go up and down completely randomly.

Pair Corralation between Coda Octopus and Airbus Group

Given the investment horizon of 90 days Coda Octopus is expected to generate 8.38 times less return on investment than Airbus Group. In addition to that, Coda Octopus is 1.66 times more volatile than Airbus Group NV. It trades about 0.01 of its total potential returns per unit of risk. Airbus Group NV is currently generating about 0.16 per unit of volatility. If you would invest  3,863  in Airbus Group NV on September 12, 2024 and sell it today you would earn a total of  233.00  from holding Airbus Group NV or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Coda Octopus Group  vs.  Airbus Group NV

Coda Octopus Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Coda Octopus sustained solid returns over the last few months and may actually be approaching a breakup point.

Airbus Group NV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Airbus Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coda Octopus and Airbus Group

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

The idea behind Coda Octopus Group and Airbus Group NV 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.