Correlation Between National Beverage and Codexis

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

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

Diversification Opportunities for National Beverage and Codexis

0.41

Correlation Coefficient

National Beverage  Codexis

Very weak diversification

The 3 months correlation between National and Codexis is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Codexis go up and down completely randomly.

Pair Corralation between National Beverage and Codexis

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Codexis. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 2.71 times less risky than Codexis. The stock trades about -0.02 of its potential returns per unit of risk. The Codexis is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  291.00  in Codexis on September 25, 2024 and sell it today you would earn a total of  237.00  from holding Codexis or generate 81.44% return on investment over 90 days.

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

National Beverage Corp  vs.  Codexis

National Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Codexis

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and Codexis

The main advantage of trading using opposite National Beverage and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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 National Beverage Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.