Correlation Between Applied DNA and Biodesix

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

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

Diversification Opportunities for Applied DNA and Biodesix

0.72

Correlation Coefficient

Applied DNA  Biodesix

Poor diversification

The 3 months correlation between Applied and Biodesix is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Applied DNA Sciences and Biodesix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodesix and Applied DNA 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 Applied DNA Sciences are associated (or correlated) with Biodesix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodesix has no effect on the direction of Applied DNA i.e., Applied DNA and Biodesix go up and down completely randomly.

Pair Corralation between Applied DNA and Biodesix

Given the investment horizon of 90 days Applied DNA Sciences is expected to under-perform the Biodesix. In addition to that, Applied DNA is 1.88 times more volatile than Biodesix. It trades about -0.22 of its total potential returns per unit of risk. Biodesix is currently generating about -0.21 per unit of volatility. If you would invest  146.00  in Biodesix on December 30, 2024 and sell it today you would lose (79.00) from holding Biodesix or give up 54.11% of portfolio value over 90 days.

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

Applied DNA Sciences  vs.  Biodesix

Applied DNA Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied DNA Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Biodesix

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Applied DNA and Biodesix

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

The idea behind Applied DNA Sciences and Biodesix 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.