Correlation Between Evolution Gaming and Codexis

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

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

Diversification Opportunities for Evolution Gaming and Codexis

-0.74

Correlation Coefficient

Evolution Gaming  Codexis

Pay attention - limited upside

The 3 months correlation between Evolution and Codexis is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and Evolution Gaming 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 Evolution Gaming Group 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 Evolution Gaming i.e., Evolution Gaming and Codexis go up and down completely randomly.

Pair Corralation between Evolution Gaming and Codexis

Assuming the 90 days horizon Evolution Gaming Group is expected to under-perform the Codexis. But the pink sheet apears to be less risky and, when comparing its historical volatility, Evolution Gaming Group is 2.1 times less risky than Codexis. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Codexis is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  298.00  in Codexis on October 13, 2024 and sell it today you would earn a total of  141.00  from holding Codexis or generate 47.32% return on investment over 90 days.

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

Evolution Gaming Group  vs.  Codexis

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Codexis

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 10 (%) 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 Evolution Gaming and Codexis

The main advantage of trading using opposite Evolution Gaming and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Gaming 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 Evolution Gaming Group 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.