Correlation Between Automata and COCOS BCX

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

Diversification Opportunities for Automata and COCOS BCX

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Automata and COCOS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Automata and COCOS BCX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCOS BCX and Automata 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 Automata are associated (or correlated) with COCOS BCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCOS BCX has no effect on the direction of Automata i.e., Automata and COCOS BCX go up and down completely randomly.

Pair Corralation between Automata and COCOS BCX

Assuming the 90 days trading horizon Automata is expected to generate 13.57 times less return on investment than COCOS BCX. But when comparing it to its historical volatility, Automata is 3.49 times less risky than COCOS BCX. It trades about 0.11 of its potential returns per unit of risk. COCOS BCX is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  220.00  in COCOS BCX on April 2, 2022 and sell it today you would lose (170.00)  from holding COCOS BCX or give up 77.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy55.47%
ValuesDaily Returns

Automata  vs.  COCOS BCX

 Performance (%) 
      Timeline 
Automata 
Automata Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Automata are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Automata sustained solid returns over the last few months and may actually be approaching a breakup point.

Automata Price Channel

COCOS BCX 
COCOS Performance
35 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in COCOS BCX are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COCOS BCX sustained solid returns over the last few months and may actually be approaching a breakup point.

COCOS Price Channel

Automata and COCOS BCX Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Automata and COCOS BCX

The main advantage of trading using opposite Automata and COCOS BCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automata position performs unexpectedly, COCOS BCX 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 COCOS BCX will offset losses from the drop in COCOS BCX's long position.
The idea behind Automata and COCOS BCX 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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