Correlation Between Sensient Technologies and Coda Octopus

Can any of the company-specific risk be diversified away by investing in both Sensient Technologies 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 Sensient Technologies and Coda Octopus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sensient Technologies and Coda Octopus Group, you can compare the effects of market volatilities on Sensient Technologies 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 Sensient Technologies with a short position of Coda Octopus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Coda Octopus.

Diversification Opportunities for Sensient Technologies and Coda Octopus

0.26

Correlation Coefficient

Sensient Technologies  Coda Octopus

Modest diversification

The 3 months correlation between Sensient and Coda is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and Coda Octopus go up and down completely randomly.

Pair Corralation between Sensient Technologies and Coda Octopus

Considering the 90-day investment horizon Sensient Technologies is expected to generate 3.88 times less return on investment than Coda Octopus. But when comparing it to its historical volatility, Sensient Technologies is 1.78 times less risky than Coda Octopus. It trades about 0.01 of its potential returns per unit of risk. Coda Octopus Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  706.00  in Coda Octopus Group on September 29, 2024 and sell it today you would earn a total of  95.00  from holding Coda Octopus Group or generate 13.46% return on investment over 90 days.

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

Sensient Technologies  vs.  Coda Octopus Group

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Coda Octopus Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Coda Octopus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sensient Technologies and Coda Octopus

The main advantage of trading using opposite Sensient Technologies and Coda Octopus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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.

The idea behind Sensient Technologies and Coda Octopus Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.