Correlation Between Biodesix and Applied DNA

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

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

Diversification Opportunities for Biodesix and Applied DNA

0.43

Correlation Coefficient

Biodesix  Applied DNA

Very weak diversification

The 3 months correlation between Biodesix and Applied is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Biodesix and Applied DNA Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied DNA Sciences and Biodesix 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 Biodesix are associated (or correlated) with Applied DNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied DNA Sciences has no effect on the direction of Biodesix i.e., Biodesix and Applied DNA go up and down completely randomly.

Pair Corralation between Biodesix and Applied DNA

Given the investment horizon of 90 days Biodesix is expected to under-perform the Applied DNA. But the stock apears to be less risky and, when comparing its historical volatility, Biodesix is 2.16 times less risky than Applied DNA. The stock trades about -0.18 of its potential returns per unit of risk. The Applied DNA Sciences is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Applied DNA Sciences on November 29, 2024 and sell it today you would lose (1.00) from holding Applied DNA Sciences or give up 6.67% of portfolio value over 90 days.

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

Biodesix  vs.  Applied DNA Sciences

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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Applied DNA Sciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied DNA Sciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Applied DNA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biodesix and Applied DNA

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

The idea behind Biodesix and Applied DNA Sciences 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.