Correlation Between Coda Octopus and Nordic American

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

Diversification Opportunities for Coda Octopus and Nordic American

0.15

Correlation Coefficient

Coda Octopus  Nordic American

Average diversification

The 3 months correlation between Coda and Nordic is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and Nordic American Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic American Tankers 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 Nordic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic American Tankers has no effect on the direction of Coda Octopus i.e., Coda Octopus and Nordic American go up and down completely randomly.

Pair Corralation between Coda Octopus and Nordic American

Given the investment horizon of 90 days Coda Octopus is expected to generate 3.56 times less return on investment than Nordic American. But when comparing it to its historical volatility, Coda Octopus Group is 1.27 times less risky than Nordic American. It trades about 0.02 of its potential returns per unit of risk. Nordic American Tankers is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  206.00  in Nordic American Tankers on January 21, 2024 and sell it today you would earn a total of  174.00  from holding Nordic American Tankers or generate 84.47% return on investment over 90 days.

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

Coda Octopus Group  vs.  Nordic American Tankers

Coda Octopus Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coda Octopus Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nordic American Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic American Tankers 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.

Pair Trading with Coda Octopus and Nordic American

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

The idea behind Coda Octopus Group and Nordic American Tankers 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.