Correlation Between Biodesix and Opko Health

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

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

Diversification Opportunities for Biodesix and Opko Health

-0.67

Correlation Coefficient

Biodesix  Opko Health

Excellent diversification

The 3 months correlation between Biodesix and Opko is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Biodesix and Opko Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opko Health 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 Opko Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opko Health has no effect on the direction of Biodesix i.e., Biodesix and Opko Health go up and down completely randomly.

Pair Corralation between Biodesix and Opko Health

Given the investment horizon of 90 days Biodesix is expected to generate 7.47 times less return on investment than Opko Health. In addition to that, Biodesix is 1.22 times more volatile than Opko Health. It trades about 0.0 of its total potential returns per unit of risk. Opko Health is currently generating about 0.03 per unit of volatility. If you would invest  133.00  in Opko Health on October 3, 2024 and sell it today you would earn a total of  14.00  from holding Opko Health or generate 10.53% return on investment over 90 days.

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

Biodesix  vs.  Opko Health

Biodesix

Risk-Adjusted Performance

0 of 100

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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Opko Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Opko Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Opko Health is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Biodesix and Opko Health

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

The idea behind Biodesix and Opko Health 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.