Correlation Between Cyclo Therapeutics and Codexis

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

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

Diversification Opportunities for Cyclo Therapeutics and Codexis

-0.85

Correlation Coefficient

Cyclo Therapeutics  Codexis

Pay attention - limited upside

The 3 months correlation between Cyclo and Codexis is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cyclo Therapeutics and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and Cyclo Therapeutics 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 Cyclo Therapeutics are associated (or correlated) with Codexis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codexis has no effect on the direction of Cyclo Therapeutics i.e., Cyclo Therapeutics and Codexis go up and down completely randomly.

Pair Corralation between Cyclo Therapeutics and Codexis

Given the investment horizon of 90 days Cyclo Therapeutics is expected to generate 1.13 times more return on investment than Codexis. However, Cyclo Therapeutics is 1.13 times more volatile than Codexis. It trades about 0.09 of its potential returns per unit of risk. Codexis is currently generating about -0.05 per unit of risk. If you would invest  62.00  in Cyclo Therapeutics on October 9, 2024 and sell it today you would earn a total of  4.00  from holding Cyclo Therapeutics or generate 6.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cyclo Therapeutics  vs.  Codexis

Cyclo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyclo Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Cyclo Therapeutics is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Codexis

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 15 (%) 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.

Pair Trading with Cyclo Therapeutics and Codexis

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

The idea behind Cyclo Therapeutics and Codexis 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.