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

0.44

Correlation Coefficient

Coda Octopus  HEICO

Very weak diversification

The 3 months correlation between Coda and HEICO is 0.44. 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 1.09 times less return on investment than HEICO. In addition to that, Coda Octopus is 2.11 times more volatile than HEICO. It trades about 0.09 of its total potential returns per unit of risk. HEICO is currently generating about 0.2 per unit of volatility. If you would invest  19,494  in HEICO on September 4, 2024 and sell it today you would earn a total of  1,330  from holding HEICO or generate 6.82% 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

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.

HEICO

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HEICO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HEICO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

The idea behind Coda Octopus Group and HEICO 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.