Correlation Between Codexis and United Guardian

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

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

Diversification Opportunities for Codexis and United Guardian

0.21

Correlation Coefficient

Codexis  United Guardian

Modest diversification

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

Pair Corralation between Codexis and United Guardian

Given the investment horizon of 90 days Codexis is expected to under-perform the United Guardian. In addition to that, Codexis is 2.74 times more volatile than United Guardian. It trades about -0.11 of its total potential returns per unit of risk. United Guardian is currently generating about 0.0 per unit of volatility. If you would invest  927.00  in United Guardian on December 28, 2024 and sell it today you would lose (7.00) from holding United Guardian or give up 0.76% of portfolio value over 90 days.

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

Codexis  vs.  United Guardian

Codexis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Codexis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

United Guardian

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, United Guardian is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Codexis and United Guardian

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

The idea behind Codexis and United Guardian 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.