Correlation Between Aemetis and Codexis

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

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

Diversification Opportunities for Aemetis and Codexis

0.62

Correlation Coefficient

Aemetis  Codexis

Poor diversification

The 3 months correlation between Aemetis and Codexis is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aemetis and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and Aemetis 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 Aemetis 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 Aemetis i.e., Aemetis and Codexis go up and down completely randomly.

Pair Corralation between Aemetis and Codexis

Given the investment horizon of 90 days Aemetis is expected to generate 1.98 times less return on investment than Codexis. In addition to that, Aemetis is 1.37 times more volatile than Codexis. It trades about 0.09 of its total potential returns per unit of risk. Codexis is currently generating about 0.25 per unit of volatility. If you would invest  285.00  in Codexis on September 15, 2024 and sell it today you would earn a total of  268.00  from holding Codexis or generate 94.04% return on investment over 90 days.

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

Aemetis  vs.  Codexis

Aemetis

Risk-Adjusted Performance

7 of 100

OK

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

Codexis

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aemetis and Codexis

The main advantage of trading using opposite Aemetis and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aemetis 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 Aemetis 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.