Correlation Between Biodesix and Standard Biotools

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

By analyzing existing cross correlation between Biodesix and Standard Biotools, you can compare the effects of market volatilities on Biodesix and Standard Biotools 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 Standard Biotools. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biodesix and Standard Biotools.

Diversification Opportunities for Biodesix and Standard Biotools

0.85

Correlation Coefficient

Biodesix  Standard Biotools

Very poor diversification

The 3 months correlation between Biodesix and Standard is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Biodesix and Standard Biotools in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Biotools 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 Standard Biotools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Biotools has no effect on the direction of Biodesix i.e., Biodesix and Standard Biotools go up and down completely randomly.

Pair Corralation between Biodesix and Standard Biotools

Given the investment horizon of 90 days Biodesix is expected to under-perform the Standard Biotools. But the stock apears to be less risky and, when comparing its historical volatility, Biodesix is 1.09 times less risky than Standard Biotools. The stock trades about -0.21 of its potential returns per unit of risk. The Standard Biotools is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  177.00  in Standard Biotools on December 30, 2024 and sell it today you would lose (63.00) from holding Standard Biotools or give up 35.59% of portfolio value over 90 days.

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

Biodesix  vs.  Standard Biotools

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.

Standard Biotools

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standard Biotools 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Biodesix and Standard Biotools

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

The idea behind Biodesix and Standard Biotools 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.