Correlation Between Applied DNA and Precipio

Can any of the company-specific risk be diversified away by investing in both Applied DNA and Precipio 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 Precipio 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 Precipio, you can compare the effects of market volatilities on Applied DNA and Precipio 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 Precipio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied DNA and Precipio.

Diversification Opportunities for Applied DNA and Precipio

0.05

Correlation Coefficient

Applied DNA  Precipio

Significant diversification

The 3 months correlation between Applied and Precipio is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Applied DNA Sciences and Precipio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precipio 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 Precipio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precipio has no effect on the direction of Applied DNA i.e., Applied DNA and Precipio go up and down completely randomly.

Pair Corralation between Applied DNA and Precipio

Given the investment horizon of 90 days Applied DNA Sciences is expected to under-perform the Precipio. In addition to that, Applied DNA is 4.18 times more volatile than Precipio. It trades about -0.26 of its total potential returns per unit of risk. Precipio is currently generating about -0.08 per unit of volatility. If you would invest  664.00  in Precipio on August 31, 2024 and sell it today you would lose (92.00) from holding Precipio or give up 13.86% of portfolio value over 90 days.

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

Applied DNA Sciences  vs.  Precipio

Applied DNA Sciences

Risk-Adjusted Performance

0 of 100

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 December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Precipio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precipio 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 basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Applied DNA and Precipio

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

The idea behind Applied DNA Sciences and Precipio 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.