Correlation Between Coda Octopus and Simply Good

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

Diversification Opportunities for Coda Octopus and Simply Good

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Coda Octopus and Simply is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Coda Octopus Group and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Coda Octopus i.e., Coda Octopus and Simply Good go up and down completely randomly.

Pair Corralation between Coda Octopus and Simply Good

Given the investment horizon of 90 days Coda Octopus Group is expected to under-perform the Simply Good. In addition to that, Coda Octopus is 1.29 times more volatile than Simply Good Foods. It trades about -0.01 of its total potential returns per unit of risk. Simply Good Foods is currently generating about 0.03 per unit of volatility. If you would invest  3,272  in Simply Good Foods on September 3, 2022 and sell it today you would earn a total of  670.00  from holding Simply Good Foods or generate 20.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy99.77%
ValuesDaily Returns

Coda Octopus Group  vs.  Simply Good Foods

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

Coda Octopus Price Channel

Simply Good Foods 
Simply Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Simply Good Foods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Simply Good revealed solid returns over the last few months and may actually be approaching a breakup point.

Simply Price Channel

Coda Octopus and Simply Good Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coda Octopus and Simply Good

The main advantage of trading using opposite Coda Octopus and Simply Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coda Octopus position performs unexpectedly, Simply Good 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 Simply Good will offset losses from the drop in Simply Good's long position.
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The idea behind Coda Octopus Group and Simply Good Foods 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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