Correlation Between Codan and Energous

Can any of the company-specific risk be diversified away by investing in both Codan and Energous 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 Codan and Energous into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Codan Limited and Energous, you can compare the effects of market volatilities on Codan and Energous 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 Codan with a short position of Energous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Codan and Energous.

Diversification Opportunities for Codan and Energous

0.21

Correlation Coefficient

Codan  Energous

Modest diversification

The 3 months correlation between Codan and Energous is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Codan Limited and Energous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energous and Codan 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 Codan Limited are associated (or correlated) with Energous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energous has no effect on the direction of Codan i.e., Codan and Energous go up and down completely randomly.

Pair Corralation between Codan and Energous

Assuming the 90 days horizon Codan is expected to generate 1.5 times less return on investment than Energous. In addition to that, Codan is 1.02 times more volatile than Energous. It trades about 0.13 of its total potential returns per unit of risk. Energous is currently generating about 0.2 per unit of volatility. If you would invest  30.00  in Energous on April 24, 2025 and sell it today you would earn a total of  24.00  from holding Energous or generate 80.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Codan Limited  vs.  Energous

Codan Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Codan Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Codan reported solid returns over the last few months and may actually be approaching a breakup point.

Energous

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energous are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Energous unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Codan and Energous

The main advantage of trading using opposite Codan and Energous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Codan position performs unexpectedly, Energous 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 Energous will offset losses from the drop in Energous' long position.

The idea behind Codan Limited and Energous 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 the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.