Correlation Between Gevo and Amyris

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

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

Diversification Opportunities for Gevo and Amyris

-0.09

Correlation Coefficient

Gevo  Amyris

Good diversification

The 3 months correlation between Gevo and Amyris is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gevo Inc and Amyris Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amyris Inc and Gevo 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 Gevo Inc are associated (or correlated) with Amyris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amyris Inc has no effect on the direction of Gevo i.e., Gevo and Amyris go up and down completely randomly.

Pair Corralation between Gevo and Amyris

Given the investment horizon of 90 days Gevo Inc is expected to generate 0.83 times more return on investment than Amyris. However, Gevo Inc is 1.2 times less risky than Amyris. It trades about 0.02 of its potential returns per unit of risk. Amyris Inc is currently generating about -0.03 per unit of risk. If you would invest  174.00  in Gevo Inc on September 14, 2024 and sell it today you would lose (19.00) from holding Gevo Inc or give up 10.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.09%
Values	Daily Returns

Gevo Inc  vs.  Amyris Inc

Gevo Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gevo Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Gevo displayed solid returns over the last few months and may actually be approaching a breakup point.

Amyris Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amyris Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amyris is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gevo and Amyris

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

The idea behind Gevo Inc and Amyris Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..