Correlation Between Suntory Beverage and Codexis

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

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

Diversification Opportunities for Suntory Beverage and Codexis

-0.69

Correlation Coefficient

Suntory Beverage  Codexis

Excellent diversification

The 3 months correlation between Suntory and Codexis is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and Suntory 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 Suntory Beverage Food 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 Suntory Beverage i.e., Suntory Beverage and Codexis go up and down completely randomly.

Pair Corralation between Suntory Beverage and Codexis

Assuming the 90 days horizon Suntory Beverage Food is expected to under-perform the Codexis. But the pink sheet apears to be less risky and, when comparing its historical volatility, Suntory Beverage Food is 2.7 times less risky than Codexis. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Codexis is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  287.00  in Codexis on October 9, 2024 and sell it today you would earn a total of  212.00  from holding Codexis or generate 73.87% return on investment over 90 days.

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

Suntory Beverage Food  vs.  Codexis

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food 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 technical and fundamental 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

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 Suntory Beverage and Codexis

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

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.