Correlation Between Odyssey Energy and Manhattan Corp

Can any of the company-specific risk be diversified away by investing in both Odyssey Energy and Manhattan Corp 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 Odyssey Energy and Manhattan Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Odyssey Energy and Manhattan Corp, you can compare the effects of market volatilities on Odyssey Energy and Manhattan Corp 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 Odyssey Energy with a short position of Manhattan Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odyssey Energy and Manhattan Corp.

Diversification Opportunities for Odyssey Energy and Manhattan Corp

0.52

Correlation Coefficient

Odyssey Energy  Manhattan Corp

Very weak diversification

The 3 months correlation between Odyssey and Manhattan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Odyssey Energy and Manhattan Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Corp and Odyssey Energy 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 Odyssey Energy are associated (or correlated) with Manhattan Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Corp has no effect on the direction of Odyssey Energy i.e., Odyssey Energy and Manhattan Corp go up and down completely randomly.

Pair Corralation between Odyssey Energy and Manhattan Corp

Assuming the 90 days trading horizon Odyssey Energy is expected to generate 0.34 times more return on investment than Manhattan Corp. However, Odyssey Energy is 2.98 times less risky than Manhattan Corp. It trades about -0.09 of its potential returns per unit of risk. Manhattan Corp is currently generating about -0.15 per unit of risk. If you would invest  2.00  in Odyssey Energy on September 27, 2024 and sell it today you would lose (0.20) from holding Odyssey Energy or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Odyssey Energy  vs.  Manhattan Corp

Odyssey Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odyssey Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Manhattan Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manhattan Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Manhattan Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Odyssey Energy and Manhattan Corp

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

The idea behind Odyssey Energy and Manhattan Corp 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.