Correlation Between Codexis and Davis Commodities

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

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

Diversification Opportunities for Codexis and Davis Commodities

0.5

Correlation Coefficient

Codexis  Davis Commodities

Very weak diversification

The 3 months correlation between Codexis and Davis is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Codexis and Davis Commodities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Commodities 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 Davis Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Commodities has no effect on the direction of Codexis i.e., Codexis and Davis Commodities go up and down completely randomly.

Pair Corralation between Codexis and Davis Commodities

Given the investment horizon of 90 days Codexis is expected to generate 1.53 times less return on investment than Davis Commodities. But when comparing it to its historical volatility, Codexis is 1.58 times less risky than Davis Commodities. It trades about 0.1 of its potential returns per unit of risk. Davis Commodities Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  56.00  in Davis Commodities Limited on May 28, 2025 and sell it today you would earn a total of  18.40  from holding Davis Commodities Limited or generate 32.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Codexis  vs.  Davis Commodities Limited

Codexis

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Davis Commodities

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Commodities Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, Davis Commodities disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Codexis and Davis Commodities

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

The idea behind Codexis and Davis Commodities Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.