Correlation Between Coda Octopus and Hutchison Port

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

Diversification Opportunities for Coda Octopus and Hutchison Port

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Coda Octopus and Hutchison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and Hutchison Port Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Port Holdings 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 Hutchison Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hutchison Port Holdings has no effect on the direction of Coda Octopus i.e., Coda Octopus and Hutchison Port go up and down completely randomly.

Pair Corralation between Coda Octopus and Hutchison Port

If you would invest  601.00  in Coda Octopus Group on September 5, 2022 and sell it today you would earn a total of  43.00  from holding Coda Octopus Group or generate 7.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Coda Octopus Group  vs.  Hutchison Port Holdings

 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 uncertain fundamental indicators, Coda Octopus sustained solid returns over the last few months and may actually be approaching a breakup point.

Coda Octopus Price Channel

Hutchison Port Holdings 
Hutchison Performance
0 of 100
Over the last 90 days Hutchison Port Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hutchison Port is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Coda Octopus and Hutchison Port Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coda Octopus and Hutchison Port

The main advantage of trading using opposite Coda Octopus and Hutchison Port positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus position performs unexpectedly, Hutchison Port 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 Hutchison Port will offset losses from the drop in Hutchison Port's long position.
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The idea behind Coda Octopus Group and Hutchison Port Holdings 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Hutchison Port as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Hutchison Port's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Hutchison Port's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Hutchison Port Holdings.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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