Correlation Between Codexis and MSP Recovery

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

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

Diversification Opportunities for Codexis and MSP Recovery

-0.25

Correlation Coefficient

Codexis  MSP Recovery

Very good diversification

The 3 months correlation between Codexis and MSP is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Codexis and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery and Codexis 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 Codexis are associated (or correlated) with MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Codexis i.e., Codexis and MSP Recovery go up and down completely randomly.

Pair Corralation between Codexis and MSP Recovery

Given the investment horizon of 90 days Codexis is expected to generate 0.29 times more return on investment than MSP Recovery. However, Codexis is 3.45 times less risky than MSP Recovery. It trades about 0.02 of its potential returns per unit of risk. MSP Recovery is currently generating about -0.01 per unit of risk. If you would invest  645.00  in Codexis on October 25, 2024 and sell it today you would lose (147.00) from holding Codexis or give up 22.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.96%
Values	Daily Returns

Codexis  vs.  MSP Recovery

Codexis

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

MSP Recovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSP Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak technical and fundamental indicators, MSP Recovery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Codexis and MSP Recovery

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

The idea behind Codexis and MSP Recovery 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.