Correlation Between Flora Growth and Codexis

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

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

Diversification Opportunities for Flora Growth and Codexis

0.92

Correlation Coefficient

Flora Growth  Codexis

Almost no diversification

The 3 months correlation between Flora and Codexis is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Flora Growth Corp and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and Flora Growth 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 Flora Growth 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 Flora Growth i.e., Flora Growth and Codexis go up and down completely randomly.

Pair Corralation between Flora Growth and Codexis

Given the investment horizon of 90 days Flora Growth Corp is expected to generate 0.92 times more return on investment than Codexis. However, Flora Growth Corp is 1.08 times less risky than Codexis. It trades about -0.07 of its potential returns per unit of risk. Codexis is currently generating about -0.16 per unit of risk. If you would invest  82.00  in Flora Growth Corp on January 26, 2025 and sell it today you would lose (24.00) from holding Flora Growth Corp or give up 29.27% of portfolio value over 90 days.

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

Flora Growth Corp  vs.  Codexis

Flora Growth Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flora Growth Corp 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 rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Codexis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Codexis 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 comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Flora Growth and Codexis

The main advantage of trading using opposite Flora Growth and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flora Growth 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 Flora Growth 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.