Correlation Between Applied DNA and Sera Prognostics

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

Diversification Opportunities for Applied DNA and Sera Prognostics

0.31

Correlation Coefficient

Applied DNA  Sera Prognostics

Weak diversification

The 3 months correlation between Applied and Sera is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Applied DNA Sciences and Sera Prognostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sera Prognostics 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 Sera Prognostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sera Prognostics has no effect on the direction of Applied DNA i.e., Applied DNA and Sera Prognostics go up and down completely randomly.

Pair Corralation between Applied DNA and Sera Prognostics

Given the investment horizon of 90 days Applied DNA Sciences is expected to under-perform the Sera Prognostics. In addition to that, Applied DNA is 1.24 times more volatile than Sera Prognostics. It trades about -0.06 of its total potential returns per unit of risk. Sera Prognostics is currently generating about 0.09 per unit of volatility. If you would invest  180.00  in Sera Prognostics on September 14, 2024 and sell it today you would earn a total of  683.00  from holding Sera Prognostics or generate 379.44% return on investment over 90 days.

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

Applied DNA Sciences  vs.  Sera Prognostics

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sera Prognostics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sera Prognostics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Sera Prognostics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied DNA and Sera Prognostics

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

The idea behind Applied DNA Sciences and Sera Prognostics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.