Correlation Between Codexis and TPG Telecom

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

By analyzing existing cross correlation between Codexis and TPG Telecom Limited, you can compare the effects of market volatilities on Codexis and TPG Telecom 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Codexis and TPG Telecom.

Diversification Opportunities for Codexis and TPG Telecom

0.46

Correlation Coefficient

Codexis  TPG Telecom

Very weak diversification

The 3 months correlation between Codexis and TPG is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Codexis and TPG Telecom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom Limited 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom Limited has no effect on the direction of Codexis i.e., Codexis and TPG Telecom go up and down completely randomly.

Pair Corralation between Codexis and TPG Telecom

If you would invest  349.00  in Codexis on September 5, 2024 and sell it today you would earn a total of  128.00  from holding Codexis or generate 36.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Codexis  vs.  TPG Telecom Limited

Codexis

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 17 (%) 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.

TPG Telecom Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Telecom Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, TPG Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Codexis and TPG Telecom

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

The idea behind Codexis and TPG Telecom Limited 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.