Correlation Between Coda Octopus and Chembio Diagnostics

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

Diversification Opportunities for Coda Octopus and Chembio Diagnostics

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Coda Octopus and Chembio is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and Chembio Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chembio Diagnostics 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 Chembio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chembio Diagnostics has no effect on the direction of Coda Octopus i.e., Coda Octopus and Chembio Diagnostics go up and down completely randomly.

Pair Corralation between Coda Octopus and Chembio Diagnostics

Given the investment horizon of 90 days Coda Octopus Group is expected to generate 0.32 times more return on investment than Chembio Diagnostics. However, Coda Octopus Group is 3.12 times less risky than Chembio Diagnostics. It trades about 0.02 of its potential returns per unit of risk. Chembio Diagnostics is currently generating about -0.03 per unit of risk. If you would invest  634.00  in Coda Octopus Group on September 4, 2022 and sell it today you would earn a total of  10.00  from holding Coda Octopus Group or generate 1.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Coda Octopus Group  vs.  Chembio Diagnostics

 Performance (%) 
       Timeline  
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

Chembio Diagnostics 
Chembio Performance
0 of 100
Over the last 90 days Chembio Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chembio Price Channel

Coda Octopus and Chembio Diagnostics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coda Octopus and Chembio Diagnostics

The main advantage of trading using opposite Coda Octopus and Chembio Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus position performs unexpectedly, Chembio Diagnostics 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 Chembio Diagnostics will offset losses from the drop in Chembio Diagnostics' long position.
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The idea behind Coda Octopus Group and Chembio Diagnostics 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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