Correlation Between Ecovyst and Codexis

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

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

Diversification Opportunities for Ecovyst and Codexis

0.86

Correlation Coefficient

Ecovyst  Codexis

Very poor diversification

The 3 months correlation between Ecovyst and Codexis is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and Ecovyst 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 Ecovyst 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 Ecovyst i.e., Ecovyst and Codexis go up and down completely randomly.

Pair Corralation between Ecovyst and Codexis

Given the investment horizon of 90 days Ecovyst is expected to generate 1.55 times less return on investment than Codexis. But when comparing it to its historical volatility, Ecovyst is 1.21 times less risky than Codexis. It trades about 0.31 of its potential returns per unit of risk. Codexis is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  319.00  in Codexis on August 30, 2024 and sell it today you would earn a total of  140.00  from holding Codexis or generate 43.89% return on investment over 90 days.

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

Ecovyst  vs.  Codexis

Ecovyst

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ecovyst may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 abnormal basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecovyst and Codexis

The main advantage of trading using opposite Ecovyst and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst 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 Ecovyst 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..