Correlation Between Pacific Biosciences and Codexis

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

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

Diversification Opportunities for Pacific Biosciences and Codexis

0.38

Correlation Coefficient

Pacific Biosciences  Codexis

Weak diversification

The 3 months correlation between Pacific and Codexis is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Biosciences of and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and Pacific Biosciences 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 Pacific Biosciences of 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 Pacific Biosciences i.e., Pacific Biosciences and Codexis go up and down completely randomly.

Pair Corralation between Pacific Biosciences and Codexis

Given the investment horizon of 90 days Pacific Biosciences is expected to generate 9.53 times less return on investment than Codexis. In addition to that, Pacific Biosciences is 1.43 times more volatile than Codexis. It trades about 0.02 of its total potential returns per unit of risk. Codexis is currently generating about 0.33 per unit of volatility. If you would invest  404.00  in Codexis on September 14, 2024 and sell it today you would earn a total of  149.50  from holding Codexis or generate 37.0% return on investment over 90 days.

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

Pacific Biosciences of  vs.  Codexis

Pacific Biosciences

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Biosciences of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Pacific Biosciences sustained 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 Pacific Biosciences and Codexis

The main advantage of trading using opposite Pacific Biosciences and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Biosciences 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 Pacific Biosciences of 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.