Correlation Between LabGenomics and Sugentech

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

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

Diversification Opportunities for LabGenomics and Sugentech

0.7

Correlation Coefficient

LabGenomics  Sugentech

Poor diversification

The 3 months correlation between LabGenomics and Sugentech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding LabGenomics Co and Sugentech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sugentech and LabGenomics 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 LabGenomics Co are associated (or correlated) with Sugentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sugentech has no effect on the direction of LabGenomics i.e., LabGenomics and Sugentech go up and down completely randomly.

Pair Corralation between LabGenomics and Sugentech

Assuming the 90 days trading horizon LabGenomics Co is expected to generate 1.54 times more return on investment than Sugentech. However, LabGenomics is 1.54 times more volatile than Sugentech. It trades about -0.05 of its potential returns per unit of risk. Sugentech is currently generating about -0.09 per unit of risk. If you would invest  308,000  in LabGenomics Co on September 13, 2024 and sell it today you would lose (53,000) from holding LabGenomics Co or give up 17.21% of portfolio value over 90 days.

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

LabGenomics Co  vs.  Sugentech

LabGenomics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LabGenomics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sugentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sugentech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LabGenomics and Sugentech

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

The idea behind LabGenomics Co and Sugentech 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.