Correlation Between Lockheed Martin and Coda Octopus

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Can any of the company-specific risk be diversified away by investing in both Lockheed Martin 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 Lockheed Martin and Coda Octopus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Coda Octopus Group, you can compare the effects of market volatilities on Lockheed Martin 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 Lockheed Martin with a short position of Coda Octopus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Coda Octopus.

Diversification Opportunities for Lockheed Martin and Coda Octopus

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Lockheed and Coda Octopus is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin 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 Lockheed Martin 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 Lockheed Martin 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 Lockheed Martin i.e., Lockheed Martin and Coda Octopus go up and down completely randomly.

Pair Corralation between Lockheed Martin and Coda Octopus

Considering the 90-day investment horizon Lockheed Martin is expected to generate 1.73 times less return on investment than Coda Octopus. But when comparing it to its historical volatility, Lockheed Martin is 1.63 times less risky than Coda Octopus. It trades about 0.06 of its potential returns per unit of risk. Coda Octopus Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  601.00  in Coda Octopus Group on October 30, 2022 and sell it today you would earn a total of  219.00  from holding Coda Octopus Group or generate 36.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.6%
ValuesDaily Returns

Lockheed Martin  vs.  Coda Octopus Group

 Performance (%) 
       Timeline  
Lockheed Martin 
Lockheed Performance
0 of 100
Over the last 90 days Lockheed Martin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Lockheed Martin is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Lockheed Price Channel

Coda Octopus Group 
Coda Octopus Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Coda Octopus sustained solid returns over the last few months and may actually be approaching a breakup point.

Coda Octopus Price Channel

Lockheed Martin and Coda Octopus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lockheed Martin and Coda Octopus

The main advantage of trading using opposite Lockheed Martin and Coda Octopus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin 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.
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The idea behind Lockheed Martin 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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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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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