Correlation Between DreamCIS and LabGenomics

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

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

Diversification Opportunities for DreamCIS and LabGenomics

0.74

Correlation Coefficient

DreamCIS  LabGenomics

Poor diversification

The 3 months correlation between DreamCIS and LabGenomics is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DreamCIS and LabGenomics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LabGenomics and DreamCIS 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 DreamCIS are associated (or correlated) with LabGenomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LabGenomics has no effect on the direction of DreamCIS i.e., DreamCIS and LabGenomics go up and down completely randomly.

Pair Corralation between DreamCIS and LabGenomics

Assuming the 90 days trading horizon DreamCIS is expected to under-perform the LabGenomics. In addition to that, DreamCIS is 1.08 times more volatile than LabGenomics Co. It trades about -0.05 of its total potential returns per unit of risk. LabGenomics Co is currently generating about -0.05 per unit of volatility. 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	98.31%
Values	Daily Returns

DreamCIS  vs.  LabGenomics Co

DreamCIS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DreamCIS 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.

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.

Pair Trading with DreamCIS and LabGenomics

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

The idea behind DreamCIS and LabGenomics Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.